Urban Network Privatization (original) (raw)

Management Versus Ownership: The Road-Privatization Debate

2001

oads are frequently cited as a public good even though economistshave shown that privatizing the roads would solve some of the prob-lems endemic to public roads, namely, high accident rates, conges-tion, and pollution (see Roth 1996, 1967; Block 1983, 1979, 1980). Economistshave analyzed the problem of externalities and shown how the effects of free-rider behavior can be contained. The question of natural monopoly has beencarefully examined, as well. Block (1979) has formulated something of amodel showing how a private order would operate. The aim of this presentarticle is to focus on some specific justifications that have been given for gov-ernment intervention in the market for roads. It will be argued that “com-mercialization” is not the same as “privatization” and that a private road sys-tem must be built on clearly defined property rights.What are the benefits that can be expect from privatization of the publicroads network? It is difficult to answer without engaging in the met...

Road Privatization and Sustainability

MIT Journal of Planning, 2009

Almost all road infrastructure is treated as a public good and seen as a governmental obligation. But roads differ from other public goods such as national defense in both non-rivalry and nonexclusiveness features. Moreover, Financing construction and maintenance of road infrastructure is challenging because in most countries, government revenues for road construction and maintenance are insufficient. Here, the idea of road privatization is introduced as a possible alternative. Although there are many political and societal hindrances in implementing this idea, its potential to solve problems in transportation is indisputable. The road owner pays the government for the externalities produced from his property (pollutions or accidents) but can make money by charging users (passing the externalities burden to users, while easing congestion and free rider problems) and because the road is privately constructed and owned, the opportunity cost of the road construction and maintenance is better accounted for. By assigning the road’s property to private sectors, the supply side might become more efficient based on the transformation from a publicly subsidized market to an open market framework. The equity problem of the new pricing scheme can be partially solved with a rebate policy similar to credit-based congestion pricing (CBCP).

Evaluating Various Road Ownership Structures and Potential Competition on an Urban Road Network

Fundamental changes in road ownership and pricing have been viewed as possible remedies for the road usage and funding challenges in the transportation sector. To fill the gaps in our knowledge about the choice among different ownership structures, we develop a multi-level programming model that integrates system performance and profit maximization, game theory, and modified traffic assignment sub-models. Using this model, we provide a set of policy insights for policy makers. First, toll roads are interdependent in a complex manner since some pairs of roads are substitutes and others are complements, and because such cross effects can be reversed in different time periods and under different own and cross toll rates. Second, each toll road’s profit generally increases when more roads are tolled since roads commonly act as substitutes to each other. With such an insight, policy makers can ensure higher (and/or less risky) profits from toll roads and better deals with private operators of toll roads. Third, a mixture of private and public toll roads could generate significant profits while reducing transportation costs dramatically, thus contributing to sustainability. Finally, a comprehensive long-run transportation plan must investigate various road ownership schemes and examine their impacts on the profitability and the performance of the transportation system as a whole.

Privatizing highways in the United States

Review of Industrial Organization, 2006

We review the experience of both private toll-roads built in the United States during the 1990s, and argue that the problems they encountered could have been avoided if the length of the franchise contract would adapt to demand realizations. We also argue in favor of adjudicating private toll-roads via BOT-type contracts in competitive (Demsetz) auctions. The lessons of this paper are relevant since growing congestion and troubled government finances have made private toll-roads increasingly attractive in the United States.

Privatizing Transportation through Public-Private Partnerships: Definitions, Models, and Issues

2006

There has been greater emphasis in recent times on using public-private partnerships (PPPs or P3s) to provide and deliver transportation infrastructure and services. These public-private partnerships differ from contracting out, being applicable to a broader range of projects and requiring different contract management and accountability. In the transportation arena the focus on public-private partnerships has resulted from both the need for greater reliance on private capital to fund critical infrastructure and services and the need to tap private sector expertise to ensure delivery of high quality infrastructure and services on time and on budget. This report serves as a primer on publicprivate partnerships for the delivery of transportation infrastructure and services. It provides an overview of the concept of public-private partnerships, presenting a broad definition of the privatization approach, comparing it to contracting out, and discussing a theoretical framework for understanding why, when and how partnerships are appropriate as a privatization strategy. The report also reviews six public-private partnership models-design bid build, private contract fee services, design build, design build operate maintain or build operate transfer, design build finance operate, and build own operate-identified by the Federal Highway Administration as available for use by transportation agencies considering privatizing transportation projects. Adopting a public-private partnership involves two important decisions-(1) the decision to privatize via a public-private partnership; and (2) the decision on which partnership model to adopt-which are also addressed. This report also discusses key issues and factors necessary for successful transportation public-private partnerships and provides a glossary of terms as a reference for understanding the terminology and language of privatization and public-private partnerships.