"We know that when different levels of governments have conáicting objectives, this leads to uncoordinated and inefficient pricing policies. These kind of conáicting objectives can occur in the EU between the Commission and the member states or within one country between the federal government and the regions. While the upper level is concerned with the welfare of all the citizens and wants social marginal cost based pricing, a lower level government may prefer much higher transport charges to extract revenue from transit." (Quoted from paper)