Scandinavian Working Papers in Economics
Working Paper Series,
Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance
No 14/3: Freight transport, policy instruments and climate
Svante Mandell (), Jan-Eric Nilsson and Inge Vierth
Additional contact information
Svante Mandell: Department of Real Estate and Construction Management, Royal Institute of Technology, Postal: Department of Real Estate and Construction Management , Royal Institute of Technology, Brinellvägen 1, 100 44 Stockholm, Sweden
Jan-Eric Nilsson: The Swedish National Road and Transport Research Institute (VTI), Postal: VTI - Transport Economics, Box 55685, 102 15 Stockholm
Inge Vierth: The Swedish National Road and Transport Research Institute (VTI), Postal: VTI - Transport Economics, Box 55685, 102 15 Stockholm, Sweden
Abstract: The impact of policy instruments supposed to reduce greenhouse gas emissions from road freight transports may seem smaller than expected. Using insights from economics and contract theory, the paper sorts out the (possible) instances of market failure in the freight transport market; operator market power, asymmetric information split incentives, and public goods. The primary limitations of standard policy instruments are demonstrated to be linked to unobservable information. Some of these may be reduced but not eliminated as information technologies develop, making it possible to observe, verify and provide contract-relevant information to the uninformed parties. There is little reason to believe that possible market failures present major limitations to the efficiency of economic instruments geared toward protecting the climate, other than possibly in the short run.
Keywords: Freight transport; climate; greenhouse gas; policy instruments; asymmetric information; split incentives
24 pages, April 10, 2014
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