Transport pricing in Europe

This chapter considers the European approach to transport infrastructure pricing, and specifically rail and road. Traditionally there has been a large variety of approaches to transport pricing around Europe but the European Union has established a more consistent approach based on short-run marginal cost pricing plus markups where necessary. Nevertheless, there remains considerable variation in practice. For rail, some countries charge on the basis of a very minimal interpretation of short-run marginal cost whilst others impose markups aimed at full cost recovery. For road, the principal concerns are with charging heavy goods vehicles, where the European Commission advocates distance-based charges varying with the characteristics of the vehicle, and charging for congestion in urban areas. But implementing this policy remains voluntary and relatively few countries have done so. The chapter reviews experience to date, and ends by commenting that the climate crisis has brought new urgency to making progress.