In road transport, marginal congestion costs are present whenever an additional vehi-
cle on the road reduces the speed of the other road users. This section focuses on the
*De Borger er al. (1995) examined the pricing policy problems when different levels of government used exter-
nal costs whose effects were limited to their constituency.
tThe main characteristics of the reference situation for 2005 can be summarized as follows:
(i) due to an overall growth of traffic volume between 1991 and 2005 by 22%. the average speed in the peak
period has fallen to 23.5 km/h (in the off-peak period there is much less congestion and speed is 49
km/h);
(ii) all cars comply with the EC emission directives (9lWliEEC); more specifically. we assume that gasoline
cars are equipped with a catalytic converter and that diesel cars have improved engine technology (direct
injection, turbo charger. charge cooling, exhaust gas recirculation) and an oxidation catalytic converter;
and
(iii) taxes, public transport prices and road infrastructure are unchanged with respect to 1991; this means
that public transport is subsidized and that car use is taxed mainly via the fuel tax.
SThe ExternE project is a result of the JOULE II programme. The aim of the project was to compute the
marginal external costs of different types of electric power plants.
$All costs are given in ECU in prices of 1990. The term mECU refers to 10 s ECU.