Transport Economics and Policy

There are a host of pricing instruments in direct or indirect public control in the transport sector: kilometre taxes, fuel taxes, congestion charges, vehicle taxes and subsidies such as “Bonus-Malus”, track access charges in the railway sector, public transport fares. Also reduction quotas for biofuels belongs here.

We analyse the mix of optimal pricing levels and instruments by evaluating their social costs, social benefits, fiscal effects, distributional effects and public support among various groups. We use theories and tools such as optimal pricing, applied microeconomics, and political economy. 

We typically apply them to case studies, including

• The Swedish congestion tax, where we have a long record of studying designs, effects on travel behaviour, public support and the economy in the long and short run.
• Vehicle and fuel taxation and subsidies.
• Company car benefits and the impact on car ownership, car choice and car use.
• The impact on car use and car ownership on fuel prices.
• The most cost-efficient policy mix to reach the transport carbon dioxide reduction targets.
• Effects of increased railway track access charges.
• Effects on varying port prices.
• Effects on increased fuel cost for the speeds and emissions of maritime transport.
• Optimal public transport fares, frequencies (supply) and subsidies, in big cities, small cities, and rural areas.
• Distributional effects of public transport subsidies.
• Effects on travel behaviour of differentiated pricing strategies in public transport.

Most transport policies and investments generate both positive and negative effects, but they are often irreversible and very costly.  A systematic and transparent framework for comparing benefits against costs are essential. Cost-benefit analysis (CBA) is the most important framework for this. Some transport policies and investments impact the labour market, the housing market and the market for land. Vice versa, these economic sectors have substantial impacts on transport system, since they impact the transport demand.  This is also considered in transport project appraisal.

CBA needs demand modelling and forecasts as well as valuation of non-market goods, which are all included in our research agenda. We apply theoretical frameworks, data collection and estimation methods. Our research topics include:

• Valuations of crowding and reliability in public transport.
• Methods for estimating valuations using revealed preference data.
• Changes in valuations over time.
• Methodologies forecast travel demand and freight transport demand by all modes.
• How fuel prices, port prices, railway track access charges etc. impact behaviour for individuals and firms.
• How an increased supply of roads and public transport impact car use.
• External marginal cost of wear and tear for heavy road transport.
• External marginal cost of accidents for heavy and light vehicles.

Our research also includes appraisal issues such as

• wider impacts on the labour market and social inclusion, i.e. productivity and employment, equity, and gender equity effects. 
• Improving applied methods and guidelines.  
• We also undertake case studies (ex ante or ex post) and development of CBA methods for new application areas.
• Effects of transport investments on housing and land prices, and on housing construction.
• Methods for estimating valuations using stated preference data.
• The understandability of CBA among decision makers and the general public.

Our research agenda also includes analysis of the public decision making in the transport sector. For instance, we analyse to what extent cost-benefit efficiency and other factors (including political support national government in the region) impact road the selection of infrastructure investment. Our research also includes industrial organisation in the transport sector.  Industrial organisation is important for the functioning of the transport sector because many parts of the transport sector are characterised by a combination of private and public entities, and travellers and carriers. A particularly important example is the railway sector in this respect. Our research includes

• Processes for railway capacity allocation.
• Determinants of public decisions in the transport sector, and how CBA impacts decision making.
• Principles for airport slot allocation.