Charges on transport – To what extent are they passed on to users?

Jørgensen, Finn and Santos, Georgina ORCID: https://orcid.org/0000-0002-8446-8297 2014. Charges on transport – To what extent are they passed on to users? Transportation Research Part A: Policy and Practice 69 , pp. 183-195. 10.1016/j.tra.2014.08.006

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Abstract

The paper first briefly reviews the extent to which profit maximising transport firms with identical cost functions and producing identical transport services pass-on output taxes to transport users under perfect competition, under different forms of imperfect competition and when they act as monopolists. Then the analysis is extended to derive the pass-on rates and activity reductions caused by an output tax when firms care both about profit and consumer surplus, produce symmetrically differentiated services and compete simultaneously in quantities and fare and when they collude. The pass-on rates and activity reductions are highest under collusion and lowest under Cournot competition when they produce complementary services. When they produce substitute services, the result is ambiguous and the competitive situation that yields highest pass-on depends on the firms’ objective functions and how fiercely they compete. Two important counterintuitive results are that the more intensely the firms compete and the more weight they put on consumer surplus, the higher the pass-on rates are.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Geography and Planning (GEOPL)
Additional Information:	Released with a Creative Commons Attribution Non-Commercial No Derivatives License (CC BY-NC-ND) Pdf uploaded in accordance with publisher's policy at http://www.sherpa.ac.uk/romeo/issn/0965-8564/ (accessed 17.12.14).
Publisher:	Elsevier
ISSN:	0965-8564
Date of First Compliant Deposit:	30 March 2016
Date of Acceptance:	12 August 2014
Last Modified:	28 Nov 2024 19:30
URI:	https://orca.cardiff.ac.uk/id/eprint/65454

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