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Private financing and mobility management of road network with tradable credits

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  • Bao, Yue
  • Gao, Ziyou
  • Yang, Hai
  • Xu, Meng
  • Wang, Guangmin

Abstract

Tradable credits have been recognized as a powerful instrument and are increasing used in many fields. This paper employs the tradable credits scheme on traffic mobility management and private provision of public transportation infrastructure through a novel kind of private financing of public road: build-equity-credit (BEC) scheme, hoping to achieve a triple win. Namely, the government can achieve its objectives (e.g. construction of the new road, desired traffic condition, certain vehicle emissions threshold) without its own capital, the private firm can receive its expected profit with less public’s resistance and the travelers can enjoy less congested traffic with a negligible cost. Moreover, many issues that occurred upon the termination of the traditional private financing (e.g. build-operate-transfer) scheme, such as severe congestion, explosion of travel demand and lack of management and maintenance, can be avoided in BEC. A general bi-level programming problem is formulated to model the determination of capacity of the new road and the tradable credits scheme in BEC scheme. The properties of several different BEC scenarios are investigated. Generally, the link service level in BEC is not constant but depends on multiple factors. Under some conditions, the total market value of the credits charged on the new link can offset its construction cost and the profit of the private firm can always be nonnegative.

Suggested Citation

  • Bao, Yue & Gao, Ziyou & Yang, Hai & Xu, Meng & Wang, Guangmin, 2017. "Private financing and mobility management of road network with tradable credits," Transportation Research Part A: Policy and Practice, Elsevier, vol. 97(C), pages 158-176.
    • Handle: RePEc:eee:transa:v:97:y:2017:i:c:p:158-176
    DOI: 10.1016/j.tra.2017.01.013
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    1. Bao, Yue & Verhoef, Erik T. & Koster, Paul, 2019. "Regulating dynamic congestion externalities with tradable credit schemes: Does a unique equilibrium exist?," Transportation Research Part B: Methodological, Elsevier, vol. 127(C), pages 225-236.
    2. de Palma, André & Proost, Stef & Seshadri, Ravi & Ben-Akiva, Moshe, 2018. "Congestion tolling - dollars versus tokens: A comparative analysis," Transportation Research Part B: Methodological, Elsevier, vol. 108(C), pages 261-280.
    3. Zang, Guangzhi & Xu, Meng & Gao, Ziyou, 2020. "High-occupancy vehicle lane management with tradable credit scheme: An equilibrium analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 144(C).
    4. Xiao, Feng & Long, Jiancheng & Li, Lu & Kou, Gang & Nie, Yu, 2019. "Promoting social equity with cyclic tradable credits," Transportation Research Part B: Methodological, Elsevier, vol. 121(C), pages 56-73.
    5. Ren-Yong Guo & Hai-Jun Huang & Hai Yang, 2019. "Tradable Credit Scheme for Control of Evolutionary Traffic Flows to System Optimum: Model and its Convergence," Networks and Spatial Economics, Springer, vol. 19(3), pages 833-868, September.
    6. Wang, Guangmin & Gao, Ziyou & Xu, Meng, 2019. "Integrating link-based discrete credit charging scheme into discrete network design problem," European Journal of Operational Research, Elsevier, vol. 272(1), pages 176-187.
    7. Siyu Chen & Ravi Seshadri & Carlos Lima Azevedo & Arun P. Akkinepally & Renming Liu & Andrea Araldo & Yu Jiang & Moshe E. Ben-Akiva, 2021. "Market Design for Tradable Mobility Credits," Papers 2101.00669, arXiv.org, revised Sep 2022.
    8. Wang, Guangmin & Xu, Meng & Grant-Muller, Susan & Gao, Zaihan, 2020. "Combination of tradable credit scheme and link capacity improvement to balance economic growth and environmental management in sustainable-oriented transport development: A bi-objective bi-level progr," Transportation Research Part A: Policy and Practice, Elsevier, vol. 137(C), pages 459-471.
    9. Zhang, Fang & Lu, Jian & Hu, Xiaojian & Fan, Ruochuan & Chen, Junlan, 2022. "Managing bottleneck congestion with tradable credit scheme under demand uncertainty," Research in Transportation Economics, Elsevier, vol. 95(C).

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