Highway pricing and capacity choice in a road network under a build-operate-transfer scheme

It is often argued lately that the private sector should be allowed to buil d and operate roads in a transportation network at its own expense, in retu rn it should receive the revenue from road toll charge within some years, a nd then these roads will be transferred to the government. This type of bui ld-operate-transfer (B-O-T) projects is currently fashionable worldwide, es pecially for developing countries short of funds for road construction. One of the important issues concerning a highway B-O-T project is the selectio n of the capacity and toll charge of the new road and the evaluation of the relevant benefits to the private investor, the road users and the whole so ciety under various market conditions. This paper deals with the selection and evaluation of a highway project under such a B-O-T scheme. For a given road network with elastic demand, mathematical models are proposed to inves tigate the feasibility of a candidate project and ascertain the optimal cap acity and level of toll charge of the new highway. The response of road use rs to the new B-O-T project is explicitly considered. The characteristic of the problem is illustrated graphically with a numerical example. (C) 2000 Elsevier Science Ltd. All rights reserved.