Connected and automated vehicles: effects on pricing

Abstract

This chapter introduces the basic concepts of transport pricing theory applied to automated vehicles. The study covers traditional private and public transport modes, plus shared mobility systems. We briefly introduce the expected benefits and shortcomings of the automated vehicle technology, and then analyse the effect of vehicle automation on the modal attributes that are relevant to the pricing of transport services. Expected effects as discussed in the scientific literature are summarised. An optimal transport pricing model is presented considering three modes: private car, public transport, and an active mode, in order to uncover the potential effect of vehicle automation on first-best prices. We find that a cost reduction due to automation pushes towards lower optimal fares for both private cars and public transport, making both modes more accessible. Vehicle automation has the potential to make motorised transport more attractive relative to active modes, therefore, future pricing schemes should include the health and environmental benefits of active mobility.