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Analysis of road capacity and franchise price decision delegation in toll road BOT project

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  • Chen, Zhiyuan
  • Ye, Hanrui
  • Liu, Bingxi
  • Xue, Weili

Abstract

This paper studies four Build-Operate-Transfer (BOT) models that the government is a leader, and the private sector is a follower. They decide road capacity and franchise price either jointly or sequentially. We find that both the government and the private sector prefer to decide the franchise price. Social welfare can be maximized if the government decides the price, and the private sector decides capacity. We further find that the private sector does not always prefer a more extended franchise period, and the profit of the private sector is concave in the length of the concession period. Nevertheless, the government prefers a more extended concession period because of the inefficient operation cost.

Suggested Citation

  • Chen, Zhiyuan & Ye, Hanrui & Liu, Bingxi & Xue, Weili, 2021. "Analysis of road capacity and franchise price decision delegation in toll road BOT project," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 146(C).
    • Handle: RePEc:eee:transe:v:146:y:2021:i:c:s1366554520308553
    DOI: 10.1016/j.tre.2020.102213
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    References listed on IDEAS

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    Cited by:

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    4. Chen, Zhiyuan & Sun, Shaobo & Li, Jianbin & Zhang, Langlang & Fan, Hao, 2022. "Optimal BOT contracts in a two-road transportation network," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 164(C).

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