Some pricing systems seek cost recovery. One such example is
the German truck toll system, which uses the cost allocation
approach for calculating rates that recover all the costs of
motorway construction and MR&R (Doll and Schaffer, 2007).
One potential shortcoming of marginal cost pricing is lack of cost
recovery, which takes place if marginal cost falls short of average
cost. Average cost pricing guarantees cost recovery, but it does not
lead to efficiency. Doll and van Essen (2008) estimate that MR&R
marginal cost represents 23% and 27% of the MR&R average cost
for Poland and Sweden, respectively, so the use of MR&R marginal
cost pricing would lead to MR&R budget deficit. These MR&R
marginal costs are estimated using the econometric approach,
which does not explicitly model MR&R strategies used by
highway agencies. Anani (2008) shows that MR&R marginal cost
pricing using the perpetual overlay indirect approach described
above actually leads to a MR&R budget surplus because the MR&R
marginal cost exceeds MR&R average cost. It should be noted that
these calculations do not take weathering into account.
Some pricing systems seek cost recovery. One such example isthe German truck toll system, which uses the cost allocationapproach for calculating rates that recover all the costs ofmotorway construction and MR&R (Doll and Schaffer, 2007).One potential shortcoming of marginal cost pricing is lack of costrecovery, which takes place if marginal cost falls short of averagecost. Average cost pricing guarantees cost recovery, but it does notlead to efficiency. Doll and van Essen (2008) estimate that MR&Rmarginal cost represents 23% and 27% of the MR&R average costfor Poland and Sweden, respectively, so the use of MR&R marginalcost pricing would lead to MR&R budget deficit. These MR&Rmarginal costs are estimated using the econometric approach,which does not explicitly model MR&R strategies used byhighway agencies. Anani (2008) shows that MR&R marginal costpricing using the perpetual overlay indirect approach describedabove actually leads to a MR&R budget surplus because the MR&Rmarginal cost exceeds MR&R average cost. It should be noted thatthese calculations do not take weathering into account.
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