Jyh-Fa Tsai

THE ANALYSIS OF REGULATION ON PRIVATE HIGHWAY INVESTMENT UNDER A BUILD-OPERATE-TRANSFER SCHEME

The build-operate-transfer (BOT) approach has become an attractive instrument for public facility provision, especially for a project that faces difficulty with public finance. This study analyzes the regulation alternatives on private highway investment under a BOT scheme and their impacts on traffic flows, travel costs, toll, capacity, and social welfare (total user-benefit in the traffic system including congestion). For comparison, five cases are analyzed: (1) No BOT with maximizing welfare, (2) No BOT with breaking even on finance, (3) BOT without regulation, (4) BOT with a minimum flow constraint (the total users will not be less than those in Case 1), and (5) BOT with a maximum travel cost constraint (the travel cost for users on a non-tolled road will not exceed the maximum tolerance). After each case is modeled and simulated on some functional forms, we find that the case of BOT with regulations performs between the cases of maximizing welfare and that of maximizing profit. From the perspective of the government, regulation has less power in a project with low elastic demand. Furthermore, even when the regulation is strict, a high cost-efficient firm with BOT could result in a higher level of social welfare than that without a BOT scheme.

Road Pricing models with maintenance cost

According to the Federal Highway Administration of the United States, maintenance expenditure takes up more than 25% of road revenue disbursement and this percentage has been increasing gradually. The reason for the increment in maintenance cost is that there lacks incentives for road users to take this cost component into their driving behavior. That is, different classes of vehicles should be levied different levels of congestion tax due to the different degrees of damage on the highway if a road pricing policy is implemented. This paper intends to incorporate this concept into road pricing literature by introducing two types of vehicles. After the analysis of the problem, we find that different types of vehicles should be charged different tolls. The toll includes not only the travel delay cost of ones own vehicle and the other types of vehicles, but also the marginal maintenance cost that is dependent on the traffic flow. A set of numerical examples is provided to demonstrate the theoretical analyses. The result shows that both the welfare and cost coverage rate will increase when the road pricing mechanism takes the maintenance cost factor into account.

Road Investment and Congestion Tolling with Information Provision

This paper intends to analyze the integrated effects of three instruments (congestion tolling, information provision, and investment on road capacity) on improving the efficiency of road usage. The information provision effect is dealt with by comparing perfect and imperfect information cases. The road network includes one-link cases and two-link cases. Various regimes are modeled to maximize welfare at first and comparative-static analysis is then used to analyze the impact of the changes in the parameters. The result shows that the role of road investment is active. When the demand increases, the road investment will increase and therefore the optimal toll may not increase too much compared to the road congestion pricing literature without road investment such as Verhoef et al. (1996).

Urban Configurations with Suburban Employment by a Monopoly Vendor

Lai and Tsai (2008) incorporate a monopoly vendor in the Alonso-Mills-Muth model and find that the vendor will locate at one of the city boundaries. This article extends Lai and Tsai (2008) by embodying the production side and labor market for the monopoly. It endogenizes the composite good price, the wage, and the location of the subcenter to investigate the pricing behavior, the determination of the wage in the subcenter, and the urban configurations. It is shown that the monopoly will locate itself in the suburb to form a subcenter. Moreover, the rent-maximizing government will regulate the vendor to locate itself to form an overlapping land rent pattern between the central city and the suburban area.

A pricing model for heterogeneous parking demands

This paper explores monopoly pricing for heterogeneous parking demand with different parking time periods. Parking demands can be grouped as: short-time period and long-time period parking demands. The two types of demand will compete for a limited parking space and a fixed parking space. Part of the demanders that do not obtain parking at time i will continue searching for parking at time i+1. The parking space available at time i+1 will be the sum of the leaving consumers at the beginning of this time period plus the space not being used as parking in pervious periods. The monopoly maximizes the profit accumulated by each time period. The result shows that the parking fees for the two groups of demands will be a combination of two pricing principles: ”duration” based and ”right” based pricing. The former charges the same amount of fee for every unit period and the latter charges the same fee for both groups of demands.