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Highway Investment Benefits under Alternative Pricing Regimes

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  • H. C. W. L. Williams
  • D. Van Vliet
  • C. Parathira
  • K. S. Kim

Abstract

We examine the bias involved in adopting inefficient reference states as the basis for appraising road investments. User benefits from highway schemes are estimated with respect to both unpriced networks and ones subject to marginal cost (congestion) pricing on all links. We show from the analysis of several policies defined on a Cardiff network how that the difference between these measures depends on: the parameters of the demand and user cost functions and the highway policy under test. While the value of an investment under free use will typically exceed that under congestion pricing, under certain conditions, the reverse may occur. We have used "single link", "binary link", and equilibrium network models to interpret this behaviour in terms of the quantity and composition of generated traffic associated with capacity expansion policies and, in particular, the contributions from route substitution and induced traffic. ? The London School of Economics and the University of Bath 2001

Suggested Citation

  • H. C. W. L. Williams & D. Van Vliet & C. Parathira & K. S. Kim, 2001. "Highway Investment Benefits under Alternative Pricing Regimes," Journal of Transport Economics and Policy, University of Bath, vol. 35(2), pages 257-284, May.
  • Handle: RePEc:tpe:jtecpo:v:35:y:2001:i:2:p:257-284
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    Cited by:

    1. Kidokoro, Yukihiro, 2006. "Benefit estimation of transport projects--a representative consumer approach," Transportation Research Part B: Methodological, Elsevier, vol. 40(7), pages 521-542, August.
    2. Lo, Hong K. & Szeto, W.Y., 2005. "Road pricing modeling for hyper-congestion," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(7-9), pages 705-722.
    3. Calthrop, Edward & De Borger, Bruno & Proost, Stef, 2010. "Cost-benefit analysis of transport investments in distorted economies," Transportation Research Part B: Methodological, Elsevier, vol. 44(7), pages 850-869, August.
    4. Chu, Chih-Peng & Tsai, Jyh-Fa, 2008. "The optimal location and road pricing for an elevated road in a corridor," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(5), pages 842-856, June.

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