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Highway Subfranchising and Tolling Competition


  • W. D. Walls

    (University of Calgary)

  • Lasheng Yuan

    (University of Calgary)


Around the world a growing number of toll roads are currently in operation, under construction or planned. Toll roads organized as for-profit ventures compete for traffic with alternative roadways which may include toll-free roads, other toll roads, railroads and even waterways. Within a transportation network, a route connecting a single origin to a single destination can consist of multiple toll roads organized as separate decision-making entities; parallel route competition can occur between multiple end-to-end or subfranchised roadways. In this paper, we set out the analytics of competition and solve for the market equilibria under alternative organizational structures that vary with the number of serially-connected separate companies that form each of the competing routes. We find in the context of the simple network structure considered that toll road operators have an incentive to subfranchise the tolling management to several competing independent firms because subfranchising lessens tolling competition and concomitantly increases overall tolling profits.

Suggested Citation

  • W. D. Walls & Lasheng Yuan, "undated". "Highway Subfranchising and Tolling Competition," Working Papers 2009-16, Department of Economics, University of Calgary, revised 04 Sep 2009.
  • Handle: RePEc:clg:wpaper:2009-16

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    More about this item


    toll road competition; highway subfranchising;

    JEL classification:

    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy


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