A number of factors influence the efficiency, productivity, and welfare of a transportation network. Travel demand, user costs, and facility supply costs equilibrate on various time scales under a set of pricing (taxes and tolls), investment and ownership policies. Two types of equilibria exist in a transportation network, short-run traffic equilibrium and long-run supply-demand equilibrium. The phenomenon of traffic equilibrium is explored with a fixed transportation network where the capacity of links is given. Even though investment- and ownership-related policies are not of major concern for studies on traffic equilibrium, it is still a complex problem due to network congestion effects, variations of pricing rules, and multidimensionality of user choices. In order to understand the long-run supply-demand equilibrium in a transportation network, one has to consider all above-mentioned factors in a coherent analytical framework. We refer to this research problem as the transportation network growth problem, because the network evolves and link capacity is not fixed in the long run. Most previous studies have considered network pricing, investment, and ownership structures separately, which are reviewed. The paper considers choices of prices, capacity, and ownership simultaneously on small parallel, serial, and parallel-serial networks, and develops an analytical network model. We discuss properties of long-run network equilibria with different network layouts and ownership regimes, and the implications on network efficiency.
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Paper provided by University of Minnesota: Nexus Research Group in its series Working Papers with number
200710.
Length: Date of creation: 2006 Date of revision: Publication status: Published in Essays on Transportation Economics. Pablo Coto Millen and Vicente Inglada (ed.) Springer. Contributions to Economics. Handle: RePEc:nex:wpaper:economicsofnetworkgrowth
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Find related papers by JEL classification: R41 - Urban, Rural, and Regional Economics - - Transportation Systems - - - Transportation: Demand, Supply, and Congestion R42 - Urban, Rural, and Regional Economics - - Transportation Systems - - - Government and Private Investment Analysis R48 - Urban, Rural, and Regional Economics - - Transportation Systems - - - Government Pricing; Regulatory Policies D21 - Microeconomics - - Production and Organizations - - - Firm Behavior D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
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