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Pricing, Capacity Choice and Financing in Transportation Networks

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Author Info

  • Erik T. Verhoef

    ()
    (Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam)

  • Jan Rouwendal

    ()
    (Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam)

Abstract

This paper explores the interrelations between pricing, capacity choice and financingin transportation networks. It builds on the famous Mohring-Harwitz result on self-financing ofoptimally designed roads under optimal congestion pricing, and specifically investigates itsins and outs in a network environment and under various types of second-best regulation. Thepaper develops a small network model, with endogenous car-ownership, in order to study thesequestions both from an analytical and a numerical viewpoint. It is for instance shown thatapplication of the principle over an entire network may cause user prices to increase morestrongly in initially mildly congested areas compared to heavily congested areas, and that aflat kilometre charge, provided accompanied with optimal capacity policies, may result infirst-best efficiency gains.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 03-027/3.

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Date of creation: 27 Mar 2003
Date of revision:
Handle: RePEc:dgr:uvatin:20030027

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Web page: http://www.tinbergen.nl

Related research

Keywords: Traffic congestion; Road pricing; Road capacity choice.;

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Citations

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Cited by:
  1. Erik T. Verhoef & Herbert Mohring, 2007. "Self-Financing Roads," Tinbergen Institute Discussion Papers 07-068/3, Tinbergen Institute.
  2. Piet Rietveld & Stefan van Woudenberg, 2007. "Second Best Decision Making of Railway Operators: How to fix Fares, Frequency and Vehicle Size," Tinbergen Institute Discussion Papers 07-007/3, Tinbergen Institute.
  3. Erik T. Verhoef & Andrew Koh & Simon Shepherd, 2008. "Pricing, Capacity and Long-run Cost Functions for First-best and Second-best Network Problems," Tinbergen Institute Discussion Papers 08-056/3, Tinbergen Institute.
  4. De Borger, Bruno & Mayeres, Inge, 2007. "Optimal taxation of car ownership, car use and public transport: Insights derived from a discrete choice numerical optimization model," European Economic Review, Elsevier, vol. 51(5), pages 1177-1204, July.
  5. Erik T. Verhoef & Andrew Koh & Simon Shepherd, 2008. "Pricing, Capacity and Long-run Cost Functions for First-best and Second-best Network Problems," Tinbergen Institute Discussion Papers 08-056/3, Tinbergen Institute.
  6. Tan, Zhijia & Yang, Hai & Guo, Xiaolei, 2010. "Properties of Pareto-efficient contracts and regulations for road franchising," Transportation Research Part B: Methodological, Elsevier, vol. 44(4), pages 415-433, May.
  7. Erik T. Verhoef & Herbert Mohring, 2007. "Self-Financing Roads," Tinbergen Institute Discussion Papers 07-068/3, Tinbergen Institute.
  8. Feng Xie & David Levinson, 2009. "Governance choice on a serial network," Public Choice, Springer, vol. 141(1), pages 189-212, October.
  9. 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.
  10. Tsai, Jyh-Fa & Chu, Chih-Peng, 2010. "Analysis of the optimal length of road expansion - A case study of the Taipei metropolitan area," Transportation Research Part A: Policy and Practice, Elsevier, vol. 44(3), pages 147-158, March.
  11. Tan, Zhijia & Yang, Hai, 2012. "Flexible build-operate-transfer contracts for road franchising under demand uncertainty," Transportation Research Part B: Methodological, Elsevier, vol. 46(10), pages 1419-1439.
  12. Barry Ubbels & Erik Verhoef, 2006. "Governmental Competition in Road Charging and Capacity Choice," Tinbergen Institute Discussion Papers 06-036/3, Tinbergen Institute, revised 10 Sep 2007.
  13. Kockelman, Kara M. & Lemp, Jason D., 2011. "Anticipating new-highway impacts: Opportunities for welfare analysis and credit-based congestion pricing," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(8), pages 825-838, October.
  14. De Borger Bruno & Mayeres Inge, 2004. "Taxation of car ownership, car use and public transport: insights derived from a discrete choice numerical optimisation model," Energy, Transport and Environment Working Papers Series ete0413, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment.
  15. Piet Rietveld & Stefan van Woudenberg, 2007. "Second-best Decision Making of Railway Operators: How to Fix Fares, Frequency and Vehicle Size," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 41(3), pages 363-385, September.
  16. Barry Ubbels & Erik Verhoef, 2006. "Governmental Competition in Road Charging and Capacity Choice," Tinbergen Institute Discussion Papers 06-036/3, Tinbergen Institute, revised 10 Sep 2007.
  17. Xiao, Feng & Yang, Hai & Han, Deren, 2007. "Competition and efficiency of private toll roads," Transportation Research Part B: Methodological, Elsevier, vol. 41(3), pages 292-308, March.
  18. Andrew Koh & Simon Shepherd & Agachai Sumalee, 2009. "Second best toll and capacity optimisation in networks: solution algorithm and policy implications," Transportation, Springer, vol. 36(2), pages 147-165, March.

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