Properties of Pareto-efficient Contracts and Regulations for Road Franchising
Private provision of public roads through build-operate-transfer (BOT) contracts is increasing around the world. This paper investigates the properties of Pareto-efficient BOT contracts using a bi-objective programming approach under perfect information. Under certain conventional assumptions, we find that for any Pareto-efficient BOT contract: (1) the concession period should be set to be the whole road life; (2) the volume-capacity ratio (or the road service quality) and the average social cost per trip are constantly equal to those at the social optimum whenever there are constant returns to scale in road construction. Extensions are made to the cases with increasing (decreasing) returns to scale in road construction. A variety of regulatory regimes are investigated to analyze the behavior of the profit-maximizing private firm, and efficient regulations, including demand and markup charge regulations, are elucidated for both the public and private sectors to achieve a predetermined Pareto-optimal outcome.
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Availability:
- Find a library where document is available. Order URL: http://worldcat.org/issn/01912615
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Supplemental Notes:
- Abstract reprinted with permission from Elsevier.
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Authors:
- Tan, Zhijia
- Yang, Hai
- Guo, Xiaolei
- Publication Date: 2010-5
Language
- English
Media Info
- Media Type: Print
- Features: Appendices; References; Tables;
- Pagination: pp. 415-433
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Serial:
- Transportation Research Part B: Methodological
- Volume: 44
- Issue Number: 4
- Publisher: Elsevier
- ISSN: 0191-2615
- Serial URL: http://www.sciencedirect.com/science/journal/01912615
Subject/Index Terms
- TRT Terms: Build operate transfer; Contracts; Financing; Franchises; Private roads; Regulation; Road construction; Service life
- Uncontrolled Terms: Pareto optimum
- Subject Areas: Administration and Management; Highways; I10: Economics and Administration;
Filing Info
- Accession Number: 01157848
- Record Type: Publication
- Files: TRIS, ATRI
- Created Date: May 30 2010 7:44AM