Auctioning Concessions for Private Roads

Barry Ubbels () and Erik Verhoef
Additional contact information
Barry Ubbels: Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam

No 04-008/3, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: Private toll roads are now seriously considered as an alternative to public (free-access) road infrastructure. Nevertheless, complete private provision without governmental control is only rarely considered. A main consideration against private roads would be that operators would be primarily interested in maximizing profits, which – given the market power they will have – will typically not lead to welfare maximizing tolls and capacities. An important question is whether these discrepancies can be mitigated by a proper design of auctions for concessions of private roads. This paper therefore analyses capacity choice and toll setting by private investors in a competitive bidding framework organised by the government. We develop a two-link network simulation model with an untolled alternative to determine relative efficiency effects, and analyse rules for the government to organise the bidding process such that a more desired (welfare optimal) outcome is a! chieved. Our results show that, depending on the design of the auction, its outcomes may vary strongly, and may approach the maximum possible (second-best) welfare gains.

Keywords: Traffic congestion; road pricing; private roads; second-best regulation (search for similar items in EconPapers)
Date: 2004-01-22
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://papers.tinbergen.nl/04008.pdf (application/pdf)

Related works:
Journal Article: Auctioning concessions for private roads (2008)
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:tin:wpaper:20040008

Access Statistics for this paper

More papers in Tinbergen Institute Discussion Papers from Tinbergen Institute Contact information at EDIRC.
Bibliographic data for series maintained by Tinbergen Office +31 (0)10-4088900 ().