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

See all articles by Lei Zhang

Lei Zhang

Oregon State University

David Matthew Levinson

affiliation not provided to SSRN

Date Written: September 1, 2009

Abstract

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

Zhang, Lei and Levinson, David Matthew, The Economics of Road Network Ownership: An Agent-Based Approach (September 1, 2009). International Journal of Sustainable Transportation, Nov. 3, No. 5, pp. 339-359, September 2009. Available at SSRN: https://ssrn.com/abstract=1735616

Lei Zhang

Oregon State University ( email )

Bexell Hall 200
Corvallis, OR 97331
United States

David Matthew Levinson (Contact Author)

affiliation not provided to SSRN

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