Investigation On Freeway Investment And Pricing Models

The development of freeway is an important indicator of national traffic andtransportation modernization. It plays an important role in accelerating economicdevelopment and improving transport efficiency. Freeway construction needs a hugecapital cost and a long period for investment return, thus leading to a high risk ofinvestment. Consequently, an investigation on freeway investment and pricing problemscan help to direct the investment and operations of freeways in China.This thesis studies the freeway investment and pricing models when the freeway isinvested and operated by government and private company respectively. Apparently,different investment modes lead to different investment objectives. The government’sobjective is to maximize the social benefit, while a private company usually aims tomaximize its own net profit.Assuming that there are two alternative roads: one is a general highway, and the otheris a freeway. It is further assumed that two players exist in the system, i.e. road users andfreeway operator. This thesis firstly investigates the investment and pricing problem underdeterministic demand so as to determine the optimal freeway capacity and tolls. Theresults by different investment modes (i.e. social welfare maximization and profitmaximization models) are compared. In the proposed model, the route choice behavior ofroad users is explicitly taken into account. Then, the deterministic model is extended to thestochastic case. Specifically, it is assumed that travel demand follows a Poissondistribution. An expected social welfare maximization model and an expected profitmaximization model are then proposed respectively. Numerical examples are given toshow the application of the proposed models. Findings show that the investment modesand demand uncertainty have significant effects on the decisions on the freewayinvestment and pricing.