PPP motorway ventures – an optimization model to locate interchanges with social welfare and private profit objectives

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ABSTRACTThis paper proposes two optimization models for locating motorway interchanges when dealing with public–private partnerships. The models innovate by considering simultaneously the conflicting goals of the two main parties involved, government and concessionaires, in their pursuit to maximize social welfare benefits and profits, respectively. The models maximize social welfare benefits (using a consumers' surplus measure) such that a given level of profits is ensured, being one deterministic and the other stochastic. The application of the models to a real case study, involving the A25 motorway in Portugal, show that they can help determine win–win solutions for both government and concessionaires, that is, solutions with high levels of profits and social welfare benefits.