Private road networks with uncertain demand

The authors study the efficiency of private supply of roads under demand uncertainty and evaluate various regulatory policies. Due to demand uncertainty, capacity is decided before demand is known but tolls can be adjusted after demand is known. Policy implications can differ from those under deterministic demand. For instance, for serial links, the toll in the second-best zero-profit case is no longer equal to the marginal external congestion cost. In the first-best scenario, the capacity under uncertain demand is higher than that under deterministic demand of the same expected value, though self-financing still holds in expected terms. Regulation by perfect competitive auction cannot replicate the second-best zero-profit result and thus leads to a lower welfare, whereas without uncertainty, various forms of competitive auctions can attain this second-best optimum. For more complex networks, when private firms add capacity in turn, contrary to the case without demand uncertainty, some forms of auction perform better than others with demand uncertainty.

• Record URL:
  • https://doi.org/10.1016/j.retrec.2018.06.003
• Record URL:
  • http://www.sciencedirect.com/science/article/pii/S0739885917303517
• Availability:
  • Find a library where document is available. Order URL: http://worldcat.org/issn/07398859
• Supplemental Notes:
  • © 2018 Elsevier Ltd. All rights reserved. Abstract reprinted with permission of Elsevier.
• Authors:
  • Fu, Xinying
  • van den Berg, Vincent A C
  • Verhoef, Erik T
• Publication Date: 2018-10

Language

• English

Media Info

• Media Type: Web
• Features: Figures; References; Tables;
• Pagination: pp 57-68
• Serial:
  • Research in Transportation Economics
  • Volume: 70
  • Issue Number: 0
  • Publisher: Elsevier
  • ISSN: 0739-8859
  • Serial URL: http://www.sciencedirect.com/science/journal/07398859

Subject/Index Terms

• TRT Terms: Demand; Networks; Private roads; Regulation; Road pricing; Supply; Traffic congestion; Uncertainty
• Uncontrolled Terms: Auction
• Subject Areas: Finance; Highways; Policy;

Filing Info

• Accession Number: 01685535
• Record Type: Publication
• Files: TRIS
• Created Date: Nov 20 2018 10:11AM