Policy lessons for regulating public–private partnership tolling schemes in urban environments

Public–private partnerships (P3s) are likely to impact entire transportation systems in fundamental ways. However, few studies have examined the potential impact of P3s on large-scale transportation networks. These studies have focused on modeling rather than on policy analysis. The literature thus does not offer guidance for designing and administering P3s to improve transportation system performance while maintaining profitability. Using Fresno, California's transportation network as a laboratory, we consider the effects of alternative P3 tolling approaches on profit maximization and system performance optimization at full urban transportation network scale. Based on system modeling results, we offer the following recommendations for policy makers to design and promote successful P3s in urban settings: (i) to promote a profitable and a socially beneficial system, toll rates should be set examining both profit-maximizing and system-optimal rates; (ii) even though tolls (i.e., higher travel costs) on a few roads help reduce travel demand they may, counter-intuitively, lead to higher total travel cost for the overall transportation system because of users’ decision to travel longer distances to avoid tolls, especially when high toll rates are applied; (iii) lower limit(s) on tolls (in addition to upper limits) may be required to enforce system-optimal tolling and avoid undercutting by private owners; (iv) a variable tolling approach (i.e., temporally- and spatially-varying tolls) significantly reduces congestion and increases profits relative to flat tolls; and (v) public officials should provide a comprehensive plan regarding past, current, and future P3 projects along with a detailed system-wide impact analysis to promote a more sustainable transportation system.