Pricing , Capacity Choice , and Financing in Transportation Networks *

  title={Pricing , Capacity Choice , and Financing in Transportation Networks *},
  author={Erik Verhoef},
This paper explores interrelations between pricing, capacity choice, and financing in transportation networks. We build on the Mohring-Harwitz result on self-financing of optimally designed and priced roads and investigate it in a network environment under various types of second-best regulation. A small network model with endogenous car ownership demonstrates that optimal congestion pricing and capacity choice over an entire network may cause user prices to increase more in initially mildly… CONTINUE READING
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