Advanced Search
MyIDEAS: Login

Private Toll Roads: A Dynamic Equilibrium Analysis

Contents:

Author Info

  • Robin Lindsey

    (University of Alberta)

  • André de Palma

    (Université de Cergy Pontoise)

Abstract

In recent years there has been a surge of interest in private toll roads as an alternative to public free-access road infrastructure. Private toll roads have gained favour for a variety of reasons, including theirpotential to alleviate traffic congestion, shrinking public funds for road construction and maintenance,and growing acceptance of the user-pay principle.This paper takes the profitability of private toll roads as given, and focuses on their allocativeefficiency. The model features one origin and one destination linked by two parallel routes that candiffer in capacity and free-flow travel time. Congestion takes the form of queueing. Individuals decidewhether to drive, and if so on which route and at what time. Three private ownership regimes areconsidered: a private road on one route and free access on the other route, competing private roads, anda mixed duopoly with a private road competing with a public toll road. The efficiency gain (measuredby social surplus) in each regime is measured relative to the efficiency gain derived from applying first-best optimal tolls on both routes.Private toll roads are generally found to enhance efficiency. The efficiency gain is greater when tollsare varied over time to eliminate queueing, when competing routes are also tolled, when no private roadhas a dominant fraction of total capacity, and when a private road does not suffer a significant traveltime disadvantage. Paradoxically, a mixed duopoly can be less efficient than a private duopoly. Priceleadership by a public toll road operator avoids this possibility, although leadership typically yieldslittle efficiency gain.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://papers.tinbergen.nl/97057.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 97-057/3.

as in new window
Length:
Date of creation: 06 Jun 1997
Date of revision:
Handle: RePEc:dgr:uvatin:19970057

Contact details of provider:
Web page: http://www.tinbergen.nl

Related research

Keywords: private toll roads; bottleneck congestion; departure time; second-best pricing;

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
  2. Laih, Chen-Hsiu, 1994. "Queueing at a bottleneck with single- and multi-step tolls," Transportation Research Part A: Policy and Practice, Elsevier, vol. 28(3), pages 197-208, May.
  3. Small, Kenneth A, 1982. "The Scheduling of Consumer Activities: Work Trips," American Economic Review, American Economic Association, vol. 72(3), pages 467-79, June.
  4. Nijkamp, Peter & Rienstra, Sytze A, 1995. "Private Sector Involvement in Financing and Operating Transport Infrastructure," The Annals of Regional Science, Springer, vol. 29(2), pages 221-35, May.
  5. R. Arnott & A. de Palma & R. Lindsey, 1986. "Departure Time and Route Choice," Working Papers 658, Queen's University, Department of Economics.
  6. Vickrey, William S, 1969. "Congestion Theory and Transport Investment," American Economic Review, American Economic Association, vol. 59(2), pages 251-60, May.
  7. Small, Kenneth A. & Gomez-Ibanez, Jose A., 1999. "Urban transportation," Handbook of Regional and Urban Economics, in: P. C. Cheshire & E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 3, chapter 46, pages 1937-1999 Elsevier.
  8. Salant, Stephen W & Switzer, Sheldon & Reynolds, Robert J, 1983. "Losses from Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 98(2), pages 185-99, May.
  9. Verhoef, Erik & Nijkamp, Peter & Rietveld, Piet, 1996. "Second-Best Congestion Pricing: The Case of an Untolled Alternative," Journal of Urban Economics, Elsevier, vol. 40(3), pages 279-302, November.
  10. Richard Arnott & Andre de Palma & Robin Lindsey, 1985. "Economics of a Bottleneck," Working Papers 636, Queen's University, Department of Economics.
  11. Richard Arnott, 1989. "Does Providing Information to Drivers Reduce Traffic Congestion?," Discussion Papers 864, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  12. Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1993. "A Structural Model of Peak-Period Congestion: A Traffic Bottleneck with Elastic Demand," American Economic Review, American Economic Association, vol. 83(1), pages 161-79, March.
  13. Viton Philip A., 1995. "Private Roads," Journal of Urban Economics, Elsevier, vol. 37(3), pages 260-289, May.
  14. Shmanske, Stephen, 1996. " Contestability, Queues, and Governmental Entry Deterrence," Public Choice, Springer, vol. 86(1-2), pages 1-15, January.
  15. De Vany, Arthur & Saving, Thomas R, 1980. "Competition and Highway Pricing for Stochastic Traffic," The Journal of Business, University of Chicago Press, vol. 53(1), pages 45-60, January.
  16. Tabuchi Takatoshi, 1993. "Bottleneck Congestion and Modal Split," Journal of Urban Economics, Elsevier, vol. 34(3), pages 414-431, November.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. De Borger B. & Proost S., 2004. "Vertical and horizontal tax competition in the transport sector," Working Papers 2004022, University of Antwerp, Faculty of Applied Economics.
  2. Borger Bruno De & Dunkerley Fay & Proost Stef, 2008. "The Interaction between Tolls and Capacity Investment in Serial and Parallel Transport Networks," Review of Network Economics, De Gruyter, vol. 7(1), pages 1-23, March.
  3. Bruno De Borger & Stef Proost & Kurt Van Dender, 2003. "Congestion and tax competition in a parallel network," Energy, Transport and Environment Working Papers Series ete0309, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment.
  4. Grahn-Voorneveld, Sofia, 2011. "Sharing profit in parallel and serial transport networks," Working papers in Transport Economics 2011:7, CTS - Centre for Transport Studies Stockholm (KTH and VTI).

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:dgr:uvatin:19970057. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Antoine Maartens (+31 626 - 160 892)).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.