Citation

Kirkpatrick CH. Proc. IRCOBI 1975; 3: 65-72.

Copyright

(Copyright © 1975, International Research Council on Biomechanics of Injury)

DOI

unavailable

PMID

unavailable

Abstract

This paper holds that the traditional separation of the pricing and investment decisions is incorrect. Since the pricing policy that is adopted will influence the distribution of the projects benefits and costs, and provided that the policy-maker is concerned about the distributional aspects of the project, the investment appraisal cannot be divorced from the intended price of the output. The pricing decision must be incorporated, therefore, into the ex ante evaluation of a project. The paper also considers the various objectives of national planning in developing countries and notes that the objectives of increasing present consumption standards, raising the level of savings and investment, and achieving a degree of income redistribution, are common to most less developed economies. It is shown how each of these objectives is affected by a projects pricing policy and how it will determine the net social value of a project. Road user taxation is used as an example to derive an expression for the optimum level of road-user charge, and it is shown how the same approach could be used to estimate the optimum level of user- charges in other sections of the transport sector.