Pricing, Investment, and Network Equilibrium

Lei Zhang and David Levinson

No 32, Working Papers from University of Minnesota: Nexus Research Group

Abstract: Despite rapidly emerging innovative road pricing and investment principles, the development of a long run network dynamics model for necessary policy evaluation is still lagging. This research endeavors to fill this gap and models the impacts of road financing policies throughout the network equilibration process. The manner in which pricing and investment jointly shape network equilibrium is particularly important and explored in this study. The interactions among travel demand, road supply, revenue mechanisms and investment rules are modeled at the link level in a network growth simulator. After assessing several measures of effectiveness, the proposed network growth model is able to evaluate the short- and long-run impacts of a broad spectrum of road pricing and investment policies on large-scale road networks, which can provide valuable information to decision-makers such as the implications of various policy scenarios on social welfare, financial situation of road authorities and potential implementation problems. Some issues hard to address in theoretical analysis can be examined in the agent-based simulation model. As a demonstration, we apply the network growth model to assess marginal and average pricing scenarios on a sample network. Even this relatively simple application provides new insights into issues around road pricing that have not previously been seriously considered. For instance, the results disclose a potential problem of over-investment when the marginal cost pricing scheme is adopted in conjunction with a myopic profit-neutral investment policy.

Keywords: Transportation network equilibrium; Road growth; Pricing; Congestion toll; Investment; Transport policy analysis. (search for similar items in EconPapers)
JEL-codes: C72 R41 R42 R48 (search for similar items in EconPapers)
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/11299/179824 First version, 2007 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nex:wpaper:pine

Access Statistics for this paper

More papers in Working Papers from University of Minnesota: Nexus Research Group Contact information at EDIRC.
Bibliographic data for series maintained by David Levinson ( this e-mail address is bad, please contact ).