Auctioning concessions for private roads
Private toll roads are now seriously considered as an alternative to public (free-access) road infrastructure. Nevertheless, complete private provision without governmental control is only rarely considered. A main consideration against private roads would be that operators would be primarily interested in maximizing profits, which - given the market power they will have - will typically not lead to welfare-maximizing tolls and capacities. An important question is whether these discrepancies can be mitigated by a proper design of auctions for concessions of private roads. This paper therefore analyses capacity choice and toll setting by private investors in a competitive bidding framework organized by the government. We develop a two-link network simulation model with an untolled alternative to determine relative efficiency effects, and analyze rules for the government to organize the bidding process such that a more desired (welfare optimal) outcome is achieved. Our results show that, depending on the design of the auction, its outcomes may vary strongly, and may approach the maximum possible (second-best) welfare gains.
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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 42 (2008)
Issue (Month): 1 (January)
|Contact details of provider:|| Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/547/description#description|
|Order Information:|| Postal: http://www.elsevier.com/wps/find/supportfaq.cws_home/regional|
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.:
- Jyh-Fa Tsai & Chih-Peng Chu, 2003. "The analysis of regulation on private highway investment under a build-operate-transfer scheme," Transportation, Springer, vol. 30(2), pages 221-243, May.
- Rienstra, S.A. & Nijkamp, P., 1996.
"Lessons from private financing of transport infrastructure: Dutch infrastructure in the 19th century and European projects in the 20th century,"
Serie Research Memoranda
0013, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
- Peter Nijkamp & Sytze A.Rienstra, 1997. "Lessons from Private Financing of Transport Infrastructure : Dutch Infrastructure in the 19th Century and European projects in the 20th Century," Revue Économique, Programme National Persée, vol. 48(2), pages 231-246.
- AndrÊ de Palma & Robin Lindsey, 2000. "Private toll roads: Competition under various ownership regimes," The Annals of Regional Science, Springer, vol. 34(1), pages 13-35.
- Yang, Hai & Meng, Qiang, 2000. "Highway pricing and capacity choice in a road network under a build-operate-transfer scheme," Transportation Research Part A: Policy and Practice, Elsevier, vol. 34(3), pages 207-222, April.
- Verhoef, Erik T., 2007. "Second-best road pricing through highway franchising," Journal of Urban Economics, Elsevier, vol. 62(2), pages 337-361, September.
- Small, Kenneth A., 1999.
"Economies of scale and self-financing rules with non-competitive factor markets,"
Journal of Public Economics,
Elsevier, vol. 74(3), pages 431-450, December.
- Small, Kenneth A., 1996. "Economies of Scale and Self-Financing Rules with Noncompetitive Factor Markets," University of California Transportation Center, Working Papers qt70m3c7hh, University of California Transportation Center.
- 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.
- Mills, David E, 1981. "Ownership Arrangements and Congestion-Prone Facilities," American Economic Review, American Economic Association, vol. 71(3), pages 493-502, June.
- Edelson, Noel M, 1971. "Congestion Tolls Under Monopoly," American Economic Review, American Economic Association, vol. 61(5), pages 873-82, December.
- Liu, Louie Nan & McDonald, John F., 1998. "Efficient Congestion Tolls in the Presence of Unpriced Congestion: A Peak and Off-Peak Simulation Model," Journal of Urban Economics, Elsevier, vol. 44(3), pages 352-366, November.
When requesting a correction, please mention this item's handle: RePEc:eee:transa:v:42:y:2008:i:1:p:155-172. 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: (Zhang, Lei)
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.