The Economics of Transportation Network Growth

Lei Zhang and David Levinson

No 200710, Working Papers from University of Minnesota: Nexus Research Group

Abstract: A number of factors influence the efficiency, productivity, and welfare of a transportation network. Travel demand, user costs, and facility supply costs equilibrate on various time scales under a set of pricing (taxes and tolls), investment and ownership policies. Two types of equilibria exist in a transportation network, short-run traffic equilibrium and long-run supply-demand equilibrium. The phenomenon of traffic equilibrium is explored with a fixed transportation network where the capacity of links is given. Even though investment- and ownership-related policies are not of major concern for studies on traffic equilibrium, it is still a complex problem due to network congestion effects, variations of pricing rules, and multidimensionality of user choices. In order to understand the long-run supply-demand equilibrium in a transportation network, one has to consider all above-mentioned factors in a coherent analytical framework. We refer to this research problem as the transportation network growth problem, because the network evolves and link capacity is not fixed in the long run. Most previous studies have considered network pricing, investment, and ownership structures separately, which are reviewed. The paper considers choices of prices, capacity, and ownership simultaneously on small parallel, serial, and parallel-serial networks, and develops an analytical network model. We discuss properties of long-run network equilibria with different network layouts and ownership regimes, and the implications on network efficiency.

Keywords: Network economics; Modeling network dynamics; Road pricing; Transportation financing; Privatization. (search for similar items in EconPapers)
JEL-codes: C72 D21 D24 D81 D83 R41 R42 R48 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-geo, nep-net and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published in Essays on Transportation Economics. Pablo Coto Millen and Vicente Inglada (ed.) Springer. Contributions to Economics.

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http://hdl.handle.net/11299/179946 First version, 2007 (application/pdf)

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Chapter: The Economics of Transportation Network Growth (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:nex:wpaper:economicsofnetworkgrowth

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