Stef Proost

KU Leuven | ku leuven · Centre for Economic Studies

This paper surveys climate and energy policy in the EU transport sector covering the road, aviation, and shipping sectors. We summarise current policies, focusing on the Fit for 55 Package, and link the different instruments being used (e.g. cap-and-trade, tax, mandate, performance standard, or subsidy) to different sources of market failure. Next,...

We analyze congested network-based markets and their impact on competition, equilibrium charges and efficiency. Several strategies are explored including price caps, mergers and investments in new technologies. We find that congested networks served by collaborating (serial) and competing (parallel) firms may lead to excessive prices. Additionally,...

This paper surveys climate and energy policy in the EU transport sector covering the road, aviation, and shipping sectors. We summarise current policies, focusing on the Fit for 55 Package, and categorise them according to their targeted decision stage (consumption, investment, or research) and the type of instrument being used (e.g. cap-and-trade,...

This paper develops a political economy model to study strategic behavior related to the introduction of congestion policies. Our main focus is on tradeable permits, although we also study results under a congestion toll. We first study a two-period model where, in the first period, a majority decides whether or not to introduce a permit system in...

This paper uses a combination of a regional computable general equilibrium model(EDIP) and a household micro-simulation model (EUROMOD) to assess the welfare effects of a transport tax reform. The transport tax reform replaces current car fuel and ownership taxes by a road charge differentiated by time and place. This is combined with five realisti...

Secondary roads often suffer from diverted traffic trying to avoid congestion on major motorways. In this paper we study the traffic problems of a small town that is located parallel to a congested motorway and suffers from such diverted traffic (high local accident risks, local congestion and other nuisances). We assume that the motorway and the s...

Public intervention in the transport sector is motivated by market failures: climate, air pollution, congestion, imperfect competition. We review the socially optimal policy instruments (pricing, regulation, use of permits) needed to cope with these market failures. There is no guarantee that governments implement the optimal policy response as the...

This paper reviews the main pricing principles as they apply to the transport sector. To cope with the external costs of congestion, pollution, climate change, and accident risks, first-best policies require pricing all transport services at marginal social cost. However, restrictions on the pricing instruments used in practice often prevent these...

Transport markets involve interactions between multiple groups of decision-makers, hence they are good candidates to be analyzed through the prism of game theory. The many models and algorithms published to date tend to reflect different academic disciplines, including operations research, economics and engineering approaches. Models published in t...

The optimal supply of rail and bus in low density areas is studied by calibrating a demand and supply model with three modes (car, bus and rail) to an existing low density corridor. Varying the length of the network, the frequencies and the size of the populations, allows to study the trade-off between the consumer surplus losses of the public tran...

Rent seekers may attempt to limit costly rent seeking. One way is to increase the number of projects, even to universal service. In particular, a legislator may propose a number of projects that exceeds the number of members in the majority (as by too many bus stops, or too many university campuses), thereby inducing each member of the majority to...

Environmental concerns are increasingly important targets in urban traffic management. The way traffic spreads over routes in a network can affect substantially the environments well as the level of congestion. This paper explores the selection and location of control measures that influence route choice aimed at optimizing traffic system performan...

The ownership form of Air Navigation Service Providers varies across countries, ranging from state agencies belonging to the Department of Transport, to government-owned corporations, to semi-private firms with for-profit or not-for-profit mandates. This research focusses on the link between the performance of ANSPs and their ownership form. Econom...

We compare the optimal public transport subsidies for a representative bus corridor in a small city and in a big city in Sweden, derived by assuming optimal pricing, frequency, bus stop spacing, and bus lane policies. The optimal cost-recovery of the buses depends on the relative size of two costs: waiting time and crowding/congestion. In the big c...

The value of lost load (VOLL) is an essential parameter for power system reliability. It represents the cost of unserved energy during power interruptions. Various studies have estimated this parameter for different countries and more recently, for different interruption characteristics – such as interruption duration, time of interruption and inte...

This paper proposes a classification of reliability criteria for power systems based on four characteristics: (i) the set of considered system states, (ii) the objective function, (iii) the allowed real-time actions and (iv) optional non-technical constraints. Because selecting a reliability criterion involves a trade-off between multiple opposing...

As the power system is undergoing major changes that affect different stakeholders unequally, power system literature increasingly recognizes the importance of fairness. This paper focuses specifically on the concept and quantification of fairness in the context of power system reliability. Power system decisions not only affect the overall, system...

This paper develops a stylized model of cross-border balancing. We distinguish three degrees of cooperation: autarky, reserves exchange and reserves sharing. The model shows that TSO cooperation reduces costs. The gains of cooperation increase with cost asymmetry and decrease with correlation of real-time imbalances. Based on actual market data of...

In the presence of transmission outages, uncertain demand and variable renewable supply, network operators keep a reliability margin to avoid interruptions and black-outs. The reliability margin is presently determined by the N-1 reliability criterion. Our analytical model defines the optimal reliability margin by balancing congestion costs and int...

This paper studies the efficient pricing of medium distance passenger rail in Europe. Current fares and frequencies are compared with three alternatives: First-Best where road congestion is internalized, Second-Best where no road tolls are implemented and Third-Best where a maximum rail deficit is also imposed. We find that Second-Best fares depend...

This paper optimises the number of bus stops, and prices for car, bus and cycling in the busiest inner city corridor in Stockholm. We adopt the representative consumer approach and calibrate the current equilibrium using the quasi-linear utility function. We find that the number of bus stops is already close to optimal. Welfare would increase if th...

The case for some form of congestion tolling has long been made given the extent of traffic congestion in most urban transportation networks. However, there is little consensus on whether this tolling should be in the form of dollars (traditional congestion pricing schemes or price regulation) or in the form of tokens (credit based mobility schemes...

This paper studies the behavior of the national air traffic control (ATC) centers in the EU as it relates to bargaining between a union and government. We analyze wage formation, the reactions of ATC's to a price-cap, the slow adoption of new technologies, the reluctance to vertically disintegrate, the slow standardization, and the failures of merg...

This paper studies the entry of a new competitor in a public transport network. Competitors for existing rail can be long distance buses but also the vanpool services. These new lines decrease the ridership of the existing lines and increase waiting time for its passengers. A stylized network model is used to study this potential vicious cycle. We...

This paper discusses the European experience with respect to the pricing and regulation of transport services, and it draws lessons for Belgian policy making. We review the role of fuel excises, distance charges and other vehicle taxes, fuel efficiency regulation, low emission zones, etc., and we emphasize the need for new pricing instruments (dist...

An incumbent who can shift the cost of action to a successor may choose to avoid incurring the cost of an action the incumbent favors, resulting in delay. The delay will be longer the closer the preferences of officials to each other, the higher the fixed cost of action, and the higher the discount rate. Incumbents with moderate preferences have a...

Many public transport services are heavily subsidized. One of the main justifications is the expected beneficial effect on road congestion. Stockholm introduced congestion pricing in 2006 and the effects on car and public transport demand were carefully monitored. The change in prices provides unique estimates on price- and cross-price elasticities...

This paper discusses the European experience with respect to the pricing and regulation of transport services, and it draws lessons for Belgian policy making. We review the role of fuel excises, distance charges and other vehicle taxes, fuel efficiency regulation, low emission zones, etc., and we emphasize the need for new pricing instruments (dist...

This paper studies analytically a tax reform where federal gasoline and car taxes are replaced by tolls decided by local authorities. This is particularly relevant in countries with high gasoline taxes like the EU or countries that introduce gasoline taxes like China. One of the major barriers in the reform is the allocation of revenues: when the g...

This paper studies the political economy of pricing and investment for excludable and congestible public goods in a federal state. Although the model applies to many local congestible public facilities (such as libraries, museums and public swimming facilities), our main motivation is the problem of providing and pricing road infrastructure in fede...

Many countries still use federal fuel taxes as the main instrument to charge for road use. Recently, urban road pricing and regional distance charging have gained momentum, increasing opportunities for future decentralized decision-making. However, whether leaving road pricing decisions to regional authorities is a good idea is not a priori clear....

This paper analyzes the efficiency and political acceptability of road pricing and infrastructure policies targeted at relieving urban congestion. It combines a stylized transport model of an urban road network with a model of the political process that incorporates interactions between voters, citizen interest groups and politicians to explore the...

This paper develops a stylized analytical model that analyses reliability management of multiple TSOs. First we analyse the possibilities for TSO cooperation on reserves dispatch and procurement, with a focus on European network codes. Then we propose a model that theoretically analyses cross-border reserve cooperation. We distinguish two degrees o...

This paper analyzes the way in which countries with international and local truck traffic decide to switch from a simple fuel tax system to a dual system of fuel and distance charge taxes. We show what drives a country to switch and how this affects the level of fuel taxes as well as incentives for other countries to also adopt the dual system. The...

The value of lost load (VOLL) is an essential parameter for transmission system reliability management. It represents the cost of unserved energy of electricity interruptions. Various empirical studies have estimated this parameter for different countries and more recently, for different interruption characteristics - such as interruption duration,...

This paper uses a political-economy model to explain the discriminative support for some renewable technologies, for example photovoltaic. A two-party model is used to show how subsidies for technologies that are installed by voting households can incentivize swing voters to vote for a party. It is in the interest of both the incumbent and the oppo...

This paper uses a political economy model to analyse the choice between fine and detection probability. We distinguish two lobby groups: vulnerable road users and car drivers. If only vulnerable road users are lobbying, we find that the expected fine is higher than if only the interests of car drivers are taken into account. When we consider the ch...

Intuitively, one is inclined to think that traffic-responsive signal control is the most efficient control policy. In this paper, however, we show that for an intersection of two routes connecting one origin–destination pair where only one route is subject to congestion, anticipatory signal control performs better than traffic-responsive signal con...

This paper studies the political economy of public transport pricing and quality decisions in a hypothetical two-region federation. In each region there are two types of people: people not owning a car using only public transport, and car owners that demand both public transport and car trips. Each group may be a majority in the region and may also...

This paper studies the behavior of the air traffic control (ATC) centers in the EU. We investigate the functioning of the European ATC sector with a union bargaining model. In this model, working conditions are the outcome of a bargaining game between the public air traffic agency and the unions of air traffic controllers. We use this framework to...

This paper discusses the formulation of crowding in public transport and its implications for pricing, seating capacity and optimal scheduling. An analytical model is used to describe the user equilibrium and the optimal equilibrium for different stylized conditions. For the one OD pair case with identical desired arrival time, we derive the optima...

This paper surveys tax and regulatory policies for road transport in the EU. According to the economic literature, policy reforms are needed that substitute current fuel and vehicle taxes by car and truck user taxes that depend on place and time of use. The survey analyzes how policies have developed over the last 20 years, what was their motivatio...

Many public transport services are heavily subsidized. One of the main justifications of this is the expected beneficial effect on road congestion. Stockholm introduced congestion pricing in 2006 and the effects on car and public transport demand were carefully monitored. This change in prices provides unique estimates on price- and cross-price ela...

This paper analyzes the way in which countries with international and local truck traffic decide to switch from a simple fuel tax system to a dual system of fuel and distance charge taxes. We show what drives a country to switch and how this affects the level of fuel taxes as well as incentives for other countries to also adopt the dual system. The...

Cet article utilise un modele d’economie politique pour expliquer le soutien differencie accorde a certaines formes d’energie renouvelable comme le photovoltaique. Un modele avec deux partis est developpe pour montrer que un soutien favorable aux energies installees par les menages-electeurs peut inciter les electeurs a modifier leur vote. Le parti...

In this paper we optimize the regulation of an intersection of two routes connecting one origin–destination pair and study the effects of priority rules, traffic lights and tolls. We show that when the intersection is regulated by a priority rule the optimal policy is generally to block one of the two routes. When the intersection is regulated by t...

The aim of this paper is to develop a simple economic model that allows us to understand current deficiencies in Air Traffic Control performance. Our model fits within the traditional theory of regulation (surveyed in Laffont & Tirole (1993)), often applied to public utilities in a monopoly position. The model helps to study the implications of the...

We study the competition of two suburbs that are facing transit traffic flows. We show that in the absence of toll measures, the Nash equilibrium leads to a race to the top in traffic calming, except for the measures that do not affect the generalized cost of traffic. The Nash equilibrium is compared to two types of centralized decisions: the symme...

This paper explores reforms of pricing of private and public transport in Paris. Paris has used a policy of very low public transport prices and no road pricing. The Paris transport network is represented as a stylized concentric city with the choice between car, rapid rail, metro and buses as well as two income classes and different transport moti...

The paper analyses the strategic environmental policy choices of governments for the car market. We consider two countries that each have a small number of car producers who sell cars at home and abroad, there are cross border pollution externalities and cross border R&D externalities. Each government can set a fuel tax and a fuel emission standard...

This paper studies the political economy of public transport pricing and quality decisions in a hypothetical two-region federation. In each region there are two types of people: people not owning a car using only public transport, and car owners that demand both public transport and car trips. Each group may be a majority in the region and may also...

This paper assesses the economic justification for the selection of priority projects defined under the auspices of the Trans-European transport network. Three different transport models are used to analyse the costs and benefits associated with the current list of 30 priority projects. Most of these projects fail the cost-benefit test and few of t...

Across countries and regions, we observe wide variations in the level of enforcement instruments (fines and inspections) that are used to reach compliance with environmental regulations. In this paper, we study whether the differences in enforcement policies can be justified from an efficiency perspective, and if not, whether they favour the intere...

We use a simple economy with two interconnected geographical zones. Individuals can live and work in one of the two zones or can commute between them. This model is used to explore the dynamics of housing and work decisions after a permanent shock in labour demand occurred in one of the two zones. We illustrate the role of the different levels of e...

This paper considers various policy measures that governments can use to reduce traffic externalities in cities. Unlike much of the available literature that emphasized congestion, we focus on measures that reduce pollution, noise and some accident risks. These measures include noise barriers, speed bumps, traffic lights, tolls, emission standards,...

This paper studies commuting between a more productive and a less productive region. Both regions can tax or subsidize commuters and facilitate the commuting flow through transport investments. We show how strategic behaviour by regional governments may arise and lead to underinvestment in interregional transport infrastructure. This result can be...

This paper analyzes strategic interaction between intercontinental airport regulators, each of which levies airport charges paid by airlines and chooses its airport capacity under conditions of congestion. Congestion from intercontinental flights is common across intercontinental airports since departure and arrival airports are linked one to one,...

This paper compares the current taxation of diesel and gasoline cars in Belgium with the guidelines for optimal taxation. We find that diesel cars are still taxed much less than gasoline cars, resulting in a dominant market share for diesel cars in the car stock. If the fuel tax is the main instrument to control for externalities and generate reven...

This paper discusses the formulation of crowding in public transport and its implications for pricing, seating capacity and optimal scheduling. An analytical model is used to describe the user equilibrium and the optimal equilibrium for different stylized conditions. For the one OD pair case with identical desired arrival time, we derive the optima...

Many transport and other service problems come down to simple network choices: what mode and/or route to take, if some of the routes and modes are congested and their use can be priced or not priced by different operators. The operators can have different objective functions: public or private monopoly, private duopoly, etc.. This standard problem...

This paper studies the political economy of pricing and investment for excludable and congestible public goods in a federal state. Currently, we observe a wide variety of practices, ranging from federal gasoline taxes and road investment to the local supply of -- and sometimes free access to -- libraries, parking spaces and public swimming pools. T...

This paper discusses the economics of three environmental and energy issues in transport: local air pollution, energy supply and climate change. The focus is on road transport as the dominant transport mode. The application of the main environmental instruments is briefly discussed for local air pollution. For energy supply and climate change we an...

In this paper, we explore energy efficiency policies in the presence of a global environmental problem and international cost interdependency associated with R&D activities. We develop a simple model with two regions where the cost of an appliance in one region depends upon the level of energy efficiency in that region and the level of R&D activiti...

Many regions face through‐traffic that causes local negative externalities. Regions might respond by imposing user charges or investing in bypass transport infrastructure. In this paper two levels of decision‐making are studied: co‐operation among regions and acceptability within regions. If left to a single region, it will overcharge for usage and...

This paper considers various policy measures to reduce traffic externalities in cities, including externality-reducing investments, tolls, emission standards, low emission zones, and bypass capacity to guide traffic around the city center. Using a simple model that distinguishes local and through traffic, we study the optimal use of these instrumen...

Topics : Operations Research/Decision Theory ; Regional/Spatial Science ; Civil Engineering

This paper analyzes strategic interaction between intercontinental airports, each of which levies airport charges paid by airlines and chooses its own capacity under conditions of congestion. Congestion from intercontinental flights is common across the airports since departure and arrival airports are linked one to one, while purely domestic traff...

The objective of the TUMATIM project is to develop the MARKAL/TIMES modelling framework for a better assessment of energy and climate change policies. Climate change and security of supply, along with sustainable development have remained high on the agenda of the policy makers and this was reinforced by recent oil price crisis. The energy sector a...

A federal government tries to force local governments to implement welfare optimal tolling and investment. Welfare optimal tolling requires charging for marginal external costs. Local governments have an incentive to charge more than the marginal social cost whenever there is transit traffic. We analyze the pricing and investment issue in an asymme...

This paper discusses investments in transport infrastructure and incentives for commuting taxes in a multiregional setting. We study the horizontal and vertical interactions between governments. We identify incentives for strategic and tax exporting behavior that might lead to underinvestm