Charges for Road Use and Infrastructure Capacity: Congestion Costs and the Scope for a Market

The paper analyzes infrastructure charging not only from a traffic management perspective but also from the supply side. It develops pricing rules that would give infrastructure managers information on capacity choice. It is argued that for infrastructure prices to have information value for consumers as well as for infrastructure managers, it should be based on core infrastructure costs and a subset of the external costs which are included in common infrastructure charging concepts. These external costs stem from congestion costs and vehicle damage costs resulting from insufficient infrastructure maintenance. It is shown that other common pricing rules, particularly advocated in European countries, lead to an underutilization of uncongested infrastructure. The paper argues that pricing rules that deliver infrastructure services at least cost prices could help the acceptance of infrastructure pricing. Prices are less perceived as a new class of taxes but as a price for service.