A cost-benefit analysis of tunnel investment and tolling alternatives in Antwerp
AbstractThis paper presents and illustrates a comprehensive and operational model for assessing transport pricing and investment policies and regulatory regimes. The approach encompasses intra-modal as well as inter-modal competition, and could be used either by private operators or by the legislator for the purpose of evaluating market conduct. The model combines elements of contract theory, public economics, political economy, transportation economics and game theory. It incorporates a CES-based discrete-choice framework in which user charges and infrastructure investments are endogenously determined for two competing alternatives (air, rail or two parallel roads) that may be used for transportation of passengers and/or freight. The model includes separate modules for demand, supply, equilibrium and the regulatory framework. The demand module for passenger transport features a CES decision tree with three levels: choice between transport and consumption of a composite commodity, choice between peak and off-peak periods, and choice between the two transport alternatives. Elasticities of substitution at each level are parametrically given. Passengers can be segmented into classes that differ with respect to their travel preferences, incomes and costs of travel time. The demand module for freight transport also features three levels. The first level encompasses choice between transport and other production inputs, and the second and third levels are the same as for passenger transport. Freight transport can be segmented into local and transit traffic. The supply module specifies for each transport alternative travel time as a function of traffic volume and a rule for infrastructure maintenance. Operating, maintenance and investment costs are allowed to depend on the contractual form. Given the demand and supply functions, the equilibrium module computes a fixed-point solution in terms of prices and levels of congestion. Finally, the exogenous regulatory framework stipulates for each alternative the objective functions of the operators and infrastructure managers (public or private objectives), the nature of competition, procurement policies, the cost of capital, and the source and use of transport tax revenues. Possible market structures include: no tolls (free access), exogenous tolls, marginal social cost pricing, private duopoly and mixed oligopoly. Public decisions can be made either by local or central governments that may attach different welfare-distributional weights to agents (e.g. low-income vs. high-income passengers, or local vs. transit freight traffic) as well as different weights to air pollution and other (non-congestion) external transport costs. Primary outputs from the model are equilibrium prices, transport volumes, travel times, cost efficiency of operations, toll revenues and financial balances, travellers’ surplus and social welfare. In the final section of the paper the methodology is illustrated with an example of competition in the market for long-distance passenger travel between high-speed rail and air. A simple procedure allows the calibration of the parameters when aggregate data are available. The model is used to evaluate policies (pricing, investment, taxes, inter alia).
Download InfoIf 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.
Bibliographic InfoPaper provided by European Regional Science Association in its series ERSA conference papers with number ersa05p732.
Date of creation: Aug 2005
Date of revision:
Contact details of provider:
Postal: Augasse 2-6, 1090 Vienna, Austria
Web page: http://www.ersa.org
Other versions of this item:
- Proost, S. & Van der Loo, S. & de Palma, Andre & Lindsey, Robin, 2005. "A cost-benefit analysis of tunnel investment and tolling alternatives in Antwerp," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 31, pages 83-100.
- Proost Stef & Van der Loo Saskia & Andre de Palma & Lindsey Robin, 2005. "A cost-benefit analysis of tunnel investment and tolling alternatives in Antwerp," Energy, Transport and Environment Working Papers Series ete0507, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment.
- PROOST, Stef & VAN DER LOO, Saskia & DE PALMA, André & LINDSEY, Robin, . "A cost-benefit analysis of tunnel investment and tolling alternatives in Antwerp," CORE Discussion Papers RP -1883, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
- R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Systems - - - Transportation: Demand, Supply, and Congestion
- R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Systems - - - Government Pricing and Policy
This paper has been announced in the following NEP Reports:
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.:
- Richard Arnott & Marvin Kraus, 1994.
"When Are Anonymous Congestion Charges Consistent with Marginal Cost Pricing?,"
NBER Technical Working Papers
0154, National Bureau of Economic Research, Inc.
- Arnott, Richard & Kraus, Marvin, 1998. "When are anonymous congestion charges consistent with marginal cost pricing?," Journal of Public Economics, Elsevier, vol. 67(1), pages 45-64, January.
- Richard Arnott & Marvin Kraus, 1997. "When are Anonymous Congestion Charges Consistent with Marginal Cost Pricing?," Boston College Working Papers in Economics 354., Boston College Department of Economics.
- Small, Kenneth A. & Gomez-Ilbanez, Jose A., 1998. "Road Pricing for Congestion Management: The Transition from Theory to Policy," University of California Transportation Center, Working Papers qt8kk909p1, University of California Transportation Center.
- Henrik Jacobsen Kleven & Claus Thustrup Kreiner, 2003. "The Marginal Cost of Public Funds in OECD Countries. Hours of Work Versus Labor Force Participation," CESifo Working Paper Series 935, CESifo Group Munich.
- Pedro Cantos-Sanchez & Rafael Moner-Colonques & Jose J. Sempere-Monerris & Oscar Alvarez, 2008. "Viability of a New Road Infrastructure with Heterogeneous Users in Madrid Access," Working Papers 2008-06, FEDEA.
- Cantos-Sánchez, Pedro & Moner-Colonques, Rafael & Sempere-Monerris, José J. & Álvarez-SanJaime, Óscar, 2011. "Viability of new road infrastructure with heterogeneous users," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(5), pages 435-450, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gunther Maier).
If references are entirely missing, you can add them using this form.