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Viability of a New Road Infrastructure with Heterogeneous Users in Madrid Access

  • Pedro Cantos-Sanchez
  • Rafael Moner-Colonques
  • Jose J. Sempere-Monerris
  • Oscar Alvarez

This paper explores the importance of heterogeneity in value of time when assessing the viability of a new road infrastructure to alleviate congestion problems. The Spanish government has developed a congestion pricing demonstration entering Madrid city centre, where road users have to choose between a free but highly congested road and a priced free-flowing road. We consider a continuum of users who di¤er in their value of time. Users dislike congestion and this is more so the more a user values his travel time. A logit estimation is undertaken with information from a questionnaire among road users in the Eastern Madrid area to obtain users' value of time. The impact and viability of artery road R3 under several competitive regimes is examined. The tolls obtained generate a tra¢ c reallocation towards the new roadway such that revenues suffice to render the infrastructure socio-economically viable. This is so for all the competitive regimes analyzed even for modest traffic growth rates. Regarding economic viability, the artery road infrastructure is always economically viable under the private regime and for the other two regimes, a sufficiently high traffic growth rate is required.

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Paper provided by FEDEA in its series Working Papers with number 2008-06.

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Date of creation: Jan 2008
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Handle: RePEc:fda:fdaddt:2008-06
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  1. Braid, Ralph M., 1996. "Peak-Load Pricing of a Transportation Route with an Unpriced Substitute," Journal of Urban Economics, Elsevier, vol. 40(2), pages 179-197, September.
  2. 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.
  3. Small, Kenneth & Yan, Jia, 2000. "The Value of "Value Pricing" of Roads: Second-Best Pricing and Product Differentiation," Discussion Papers dp-00-08, Resources For the Future.
  4. Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1992. "Route choice with heterogeneous drivers and group-specific congestion costs," Regional Science and Urban Economics, Elsevier, vol. 22(1), pages 71-102, March.
  5. Proost, Stef & Van Dender, Kurt, 2001. "The welfare impacts of alternative policies to address atmospheric pollution in urban road transport," Regional Science and Urban Economics, Elsevier, vol. 31(4), pages 383-411, July.
  6. DE BORGER, Bruno & WOUTERS, Sandra, 1995. "Transport externalities and optimal pricing and supply decisions in urban transportation: A simulation analysis for Belgium," SESO Working Papers 1995015, University of Antwerp, Faculty of Applied Economics.
  7. 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.
  8. 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.
  9. 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.
  10. Richard Arnott & An Yan, 2000. "The Two-Mode Problem: Second-Best Pricing and Capacity," Boston College Working Papers in Economics 474, Boston College Department of Economics.
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