The Economics of Road Network Ownership: An Agent-Based Approach - International Journal of Sustainable Transportation

Recently published:

Zhang, Lei and David Levinson (2009) The Economics of Road Network Ownership: An Agent-Based Approach. International Journal of Sustainable Transport Sept. 2009 3(5) pp. 339-359. [doi]

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 overinvestment.

Keywords: network economics; privatization; road pricing; simulation of network evolution; transportation financing