- Country Profiles
- About TRIP
In the European Union, levels and structures of transport infrastructure charges vary strongly across transport modes and countries. Some degree of convergence exists on the intention to apply the principle of marginal cost pricing in various transport sectors, but, in the presence of unsolved difficulties in funding transport investment and even serious concerns about marginal social cost pricing in several countries, any such convergence is slow. Furthermore, at present, the charging regimes that can be observed are often far from internalising external costs and are rarely based on efficiency principles. In this situation, differentiation of existing charges appears to be a sensible intermediate step.
The potential scope of price differentiation is broad and includes dimensions such as:
The main objectives of the DIFFERENT project were:
A key issue in putting differentiated charges into practice was the need to understand user reactions to differentiated prices, and this will be investigated in DIFFERENT through empirical as well as interrelated theoretical work. The main emphasis of the DIFFERENT project was on the empirical work, based on real-world case studies. Hence a range of cases where price differentiation was actually applied could be studied. Use was made of Stated and Revealed Preference research. In addition, models were used to analyse the effects of price differentiation, in particular with regard to long-term consequences.
The theoretical side in DIFFERENT were based three main pillars:
The DIFFERENT work plan was broken down into five types of work packages:
All of the above were preceded by:
In general, the DIFFERENT project provided a general framework for identifying the preconditions for a fair and efficient implementation of pricing differentiation in transport, both theoretically and from a practical point of view.
In the theoretical parts of DIFFERENT several hypotheses were developed about the optimal degree of differentiation of infrastructure charges, reflecting both economic approaches as well as the viewpoint of psychology. Using a fact-sheet methodology these hypotheses were then confronted with the empirical facts derived from the case studies carried out within DIFFERENT. Among the many results that emerged from this exercise the most important were:
The factors that played a decisive role, when designing charging schemes, and therefore, that were essential for differentiation, were also identified. Normative economic theory identified three main dimensions, which must be taken into account:
Furthermore, the case studies, undertaken within DIFFERENT, had revealed a multitude of very interesting results. The general result, often denied in transport economics, was that pricing was effective. This result had been obtained considering the following two aspects across modes of transport: 1) effects of price changes (did price changes have any effect on travel behaviour and mode choice?); 2) effects of differentiation (did differentiation have any effect on travel behaviour and mode choice?).
In general, the evidence collected within DIFFERENT showed that price changes affected travel behaviour and mode choice.
In the case of interurban road transport, the evidence from case studies indicated quite clearly that price changes lead to changes in transport demand. Different network structures caused different effects, but there could be no doubt that infrastructure pricing had substantial influence on travel behaviour. As far as urban car transport was concerned the case studies showed considerable effects in all cases, except for Rome.
The case of railways was very unclear, mainly due to severe data limitations, which were a consequence of the regulatory upheaval that the railway sector was running through. As to the air transport, in all cases investigated the effects of changes in starting and landing fees on the behaviour of airlines were rather limited. A closer look at the case studies revealed that the cost-share of airport-fees in the total costs of airlines was rather small, and therefore there was no surprise that airlines reacted rather inelastic to these fees. However, this was not to say that differentiation could not work in the future if charges became more substantial, and it would be premature to conclude that pricing in the airport sector was of no relevance for airlines.
Despite of the many case studies on ports, the picture of effects of price changes for the mode 'shipping' was not clear. However, evidence was found that differentiation aiming at more environmental sound performance of mitigation of risk might be used as a tool within a wider group of tools or policy measures.
In general, the evidence collected within DIFFERENT indicated that differentiation affected travel behaviour and mode choice, but they depend very much on the particular mode under investigation and the particular circumstances.
In interurban road transport the differentiation of the German and Swiss HGV toll according to axle weight and emission classes showed clear effects. As far as urban car was concerned significant effects of differentiation could be detected in several cases analysed.
As already mentioned for the effects of price changes, the scarcity of data made it very difficult to derive clear conclusions in the case of rail.
As to air transport, the Spanish case studies delivered evidence on substantial possible welfare effects of peak-load pricing. The Spanish case studies made also clear, however, that institutional constraints currently prevent this welfare gains from being exploited. The Hamburg case study concerning noise charges indicated no effect at all. This result, however, was closely connected to special political circumstances that surrounded the introduction of these charges. The case of London led to the conclusion that there was relatively little competition between airports (at least among the London airports). Therefore, price differentiation did not seem to be a competitive parameter of airports.
For what concern maritime transport, port dues amounted only to a small share in shipping companies’ overall voyage costs, which delivered a somehow similar picture to the results found in the airport case studies. Even though a clear direct impact of differentiation could not be indicated, it should be considered that differentiation as in the case of environmental differentiated charges in Sweden had contributed to greater awareness of the environmental challenges in the sector and in combination with other mechanisms had contributed to a shortened period of implementation of emission reducing technology in ships in a geographically limited area.
Finally, a number of finding and conclusions had been drawn regarding elasticities, user reactions, regulatory factors, institutional factors, welfare and general political effects, and psychological factors.
DIFFERENT Project produced many results but also raised many new questions
Therefore, it was highly recommended that the European Commission need to initiate research on both issues: (1) how to collect data in a way that makes better research possible but which respects the strategic interests of the railway industry and (2) the relevance of price discrimination for increasing the modal share of railways.
Results from field experiments and surveys indicated that the degree of differentiation affects user’s information processing and thus their handling of differentiated pricing. Furthermore, several aspects of pricing schemes seemed to affect the likelihood of behavioural adaptation as response to schemes.
Based on the results from case studies and experiments, following conclusions were deduced:
Ecole nationale des ponts et chaussées
Technische Universität Dresden
Istituto di Studi per l'Integrazione dei Sistemi; TRT Trasporti e Territorio; Department 'Idraulica Trasporti e Strade' - University of Rome 'La Sapienza'.
SINTEF - Stiftelsen for Industriell Teknisk Forskning ved Norges Tekniske Hogskole
Instytut Logistyki i Magazynowania
Univerza v Mariboru, Fakulteta za Gradbenistvo
Universidad De Las Palmas De Gran Canaria
Ecoplan: Economic Research and Policy Consultancy
Stichting Economisch en Sociaal Instituut van de Vrije Universiteit
Napier University; University of Leeds
Prof. Christiane Bielefeldt
Transport Research Institute, Napier University
Merchiston Campus-Room D39; 10 Colinton Road
EH10 5DT Edinburgh
Tel: (+44) 1620 89 55 25
Fax: (+44) 1620 89 55 25
TRIP is funded by the European Commission's Directorate General for Mobility and Transport under the Seventh Framework Programme for Research and Technological Development (FP7).