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TRANSPORTATION INVESTMENT AND PRICING PRINCIPLES

This is an introductory text on transport pricing, financing, and investment planning. While it is meant to be comprehensive, and to illustrate the linkages among these aspects of transport planning (broadly construed), it is also somewhat simplistic--in defining cost, price, and demand functions and in dealing with all the ramifications of "the real world." Moreover, it has been necessary to overlook (other than cursorily) some important issues, such as regulation, political consensus, interfirm competition, urban development, and management. Nevertheless, the objective has been to carry the "theory" far enough to provide a fundamental understanding and to be practical. Essentially, the purpose is to present those principles, relationships, and methodologies which are necessary to provide a framework for answering the following essential questions: 1. Should any investment be made? 2. If so, how large should an investment be, and when should it be made? 3. Once it is built, how should a facility be operated and priced? Also covered is a fourth question: How should we conduct benefit-cost analyses for alternative projects or policy options? The first three questions deal with optimality (e.g., the best facility size, or the best way to price and operate a facility), while the fourth deals in a more limited way with the feasibility or worthwhileness of any project among a specific set of projects. The distinction between the two issues is important. Benefit-cost analysis involves an evaluation of the stream of year-by-year benefits and costs which accompany or stem from a specific project (to include its technology, operating policies, and pricing strategies) and, in turn, a determination of whether the project's benefits (however measured) outweigh its costs. Also, a complete benefit-cost analysis for a given set of mutually exclusive alternatives will include determination of the feasibility of undertaking projects having higher initial capital outlays than the lowest cost one which is feasible. By contrast, investment planning is concerned with optimality; that is, with determining the best project, pricing policy, and operating strategy from among a virtual infinity of alternatives. (Author)

  • Corporate Authors:

    John Wiley & Sons, Incorporated

    111 River Street
    Hoboken, NJ  United States  07030-6000
  • Authors:
    • Wohl, M
    • Hendrickson, C
  • Publication Date: 1984

Media Info

  • Features: Appendices; Figures; Tables;
  • Pagination: 398 p.

Subject/Index Terms

Filing Info

  • Accession Number: 00393935
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Jul 31 1985 12:00AM