IDEAS home Printed from https://ideas.repec.org/a/kap/netspa/v12y2012i1p109-127.html
   My bibliography  Save this article

Network Development Under a Strict Self-Financing Constraint

Author

Listed:
  • André Palma
  • Stef Proost
  • Saskia Loo

Abstract

This paper offers a stylized model in which an agency is in charge of investing in road capacity and maintain it but cannot use the capital market so that the only sources of funds are the toll revenues. We call this the strict self-financing constraint in opposition to the traditional self financing constraint where implicitly 100% of the investment needs can be financed by loans. Two stylised problems are analysed: the one link problem and the problem of two parallel links with one link untolled. The numerical illustrations show the cost of the strict self-financing constraint as a function of the importance of the initial infrastructure stock, the rate of growth of demand, the price elasticity of demand and the flexibility in the pricing instruments.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • André Palma & Stef Proost & Saskia Loo, 2012. "Network Development Under a Strict Self-Financing Constraint," Networks and Spatial Economics, Springer, vol. 12(1), pages 109-127, March.
    • Handle: RePEc:kap:netspa:v:12:y:2012:i:1:p:109-127
    DOI: 10.1007/s11067-010-9152-5
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11067-010-9152-5
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11067-010-9152-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. AndrÊ de Palma & Robin Lindsey, 2000. "Private toll roads: Competition under various ownership regimes," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 34(1), pages 13-35.
    2. Raux, Charles & Mercier, Aurélie & Souche, Stéphanie, 2007. "Chapter 11 French multi-modal transport funds: issues of cross-financing and pricing," Research in Transportation Economics, Elsevier, vol. 19(1), pages 243-268, January.
    3. Charles Raux & Aurélie Mercier & Stéphanie Souche, 2007. "French multi-modal transport funds: issues of cross-financing and pricing," Post-Print halshs-00178530, HAL.
    4. Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1993. "A Structural Model of Peak-Period Congestion: A Traffic Bottleneck with Elastic Demand," American Economic Review, American Economic Association, vol. 83(1), pages 161-179, March.
    5. Newbery, David M, 1988. "Road Damage Externalities and Road User Charges," Econometrica, Econometric Society, vol. 56(2), pages 295-316, March.
    6. de Palma, André & Lindsey, Robin & Proost, Stef, 2007. "Chapter 1 Investment and the use of tax and toll revenues in the transport sector: The research agenda," Research in Transportation Economics, Elsevier, vol. 19(1), pages 1-26, January.
    7. Erik T. Verhoef & Herbert Mohring, 2007. "Self-Financing Roads," Tinbergen Institute Discussion Papers 07-068/3, Tinbergen Institute.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. André de Palma & Mogens Fosgerau, 2011. "Dynamic Traffic Modeling," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 9, Edward Elgar Publishing.
    2. Verhoef, Erik T. & Koh, Andrew & Shepherd, Simon, 2010. "Pricing, capacity and long-run cost functions for first-best and second-best network problems," Transportation Research Part B: Methodological, Elsevier, vol. 44(7), pages 870-885, August.
    3. Lindsey, Robin, 2012. "Road pricing and investment," Economics of Transportation, Elsevier, vol. 1(1), pages 49-63.
    4. André de Palma & Mogens Fosgerau, 2010. "Dynamic and Static congestion models: A review," Working Papers hal-00539166, HAL.
    5. Baños-Pino, José F. & Boto-García, David & Zapico, Emma, 2021. "Persistence and dynamics in the efficiency of toll motorways: The Spanish case," Efficiency Series Papers 2021/03, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    6. Verhoef, Erik T., 2007. "Second-best road pricing through highway franchising," Journal of Urban Economics, Elsevier, vol. 62(2), pages 337-361, September.
    7. Erik T. Verhoef & Jan Rouwendal, 2004. "Pricing, Capacity Choice, and Financing in Transportation Networks," Journal of Regional Science, Wiley Blackwell, vol. 44(3), pages 405-435, August.
    8. de Palma, André & Lindsey, Robin & Quinet, Emile, 2004. "5. Time-Varying Road Pricing And Choice Of Toll Locations," Research in Transportation Economics, Elsevier, vol. 9(1), pages 107-131, January.
    9. Strøm, Steinar & Vislie, Jon, 2008. "A Discrete-Choice Model Approach to Optimal Congestion Change," Memorandum 09/2008, Oslo University, Department of Economics.
    10. Ian W. H. Parry & Margaret Walls & Winston Harrington, 2007. "Automobile Externalities and Policies," Journal of Economic Literature, American Economic Association, vol. 45(2), pages 373-399, June.
    11. C. Robin Lindsey & Erik T. Verhoef, 2000. "Traffic Congestion and Congestion Pricing," Tinbergen Institute Discussion Papers 00-101/3, Tinbergen Institute.
    12. Li, Zhi-Chun & Huang, Hai-Jun & Yang, Hai, 2020. "Fifty years of the bottleneck model: A bibliometric review and future research directions," Transportation Research Part B: Methodological, Elsevier, vol. 139(C), pages 311-342.
    13. Zapico, Emma & Baños-Pino, José F. & Mayor, Matías, 2024. "Optimal toll rates accounting for traffic accidents: A productive efficiency approach," Transportation Research Part A: Policy and Practice, Elsevier, vol. 181(C).
    14. Ma, Rui & Ban, Xuegang (Jeff) & Szeto, W.Y., 2017. "Emission modeling and pricing on single-destination dynamic traffic networks," Transportation Research Part B: Methodological, Elsevier, vol. 100(C), pages 255-283.
    15. Santos, Georgina & Behrendt, Hannah & Maconi, Laura & Shirvani, Tara & Teytelboym, Alexander, 2010. "Part I: Externalities and economic policies in road transport," Research in Transportation Economics, Elsevier, vol. 28(1), pages 2-45.
    16. Emmerink, Richard H. M. & Verhoef, Erik T. & Nijkamp, Peter & Rietveld, Piet, 1997. "Information in road networks with multiple origin-destination pairs," Regional Science and Urban Economics, Elsevier, vol. 27(3), pages 217-240, June.
    17. van den Berg, Vincent A.C., 2012. "Step-tolling with price-sensitive demand: Why more steps in the toll make the consumer better off," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(10), pages 1608-1622.
    18. Pavón, Nicolás & Rizzi, Luis Ignacio, 2019. "Road infrastructure and public bus transport service provision under different funding schemes: A simulation analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 125(C), pages 89-105.
    19. de Palma, André & Kilani, Moez & Lindsey, Robin, 2007. "Maintenance, service quality and congestion pricing with competing roads," Transportation Research Part B: Methodological, Elsevier, vol. 41(5), pages 573-591, June.
    20. de Palma, Andre & Lindsey, Robin, 2002. "Private roads, competition, and incentives to adopt time-based congestion tolling," Journal of Urban Economics, Elsevier, vol. 52(2), pages 217-241, September.

    More about this item

    Keywords

    Cost-benefit analysis; Road tolling; Self-financing; Infrastructure investments; Congestion; Bottleneck model;
    All these keywords.

    JEL classification:

    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:netspa:v:12:y:2012:i:1:p:109-127. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.