The Economics of Road Network Ownership: An Agent-Based Approach
International Journal of Sustainable Transportation, Nov. 3, No. 5, pp. 339-359, September 2009
22 Pages Posted: 6 Jan 2011 Last revised: 22 Jan 2011
Date Written: September 1, 2009
This paper explores the economic impact of alternative ownership structures on transportation system performance, social welfare, and regulatory needs. Road pricing, investment, and ownership decisions are jointly considered in an agent-based evolutionary model applicable to large networks. Results suggest that a centralized public regime with average-cost pricing is far from socially optimal with even moderate demand growth. When properly regulated, a completely privatized transportation network could achieve net social benefits close to the theoretical optimum and distribute a high percentage of welfare gains to travelers. But an unregulated private road economy would suffer from higher-than-optimal tolls and over-investment.
Keywords: network economics, privatization, road pricing, simulation of network evolution, transportation financing
JEL Classification: R40, R41, A12
Suggested Citation: Suggested Citation