The optimal location and road pricing for an elevated road in a corridor

Abstract

This paper discusses the location decision of an elevated new road in a corridor. The distribution of residents is uniformly located along this corridor and each individual makes trips to the CBD at the end-point of the corridor. Trip demand is elastic and dependent on the cost of a car trip that incorporates congestion cost. The government is assumed to build a new elevated road on this corridor to reduce the traffic congestion, but it has to decide where to locate the entrance of this elevated road. The optimal location of the new elevated road demon the following factors: (1) the set of tolls for the new road and original road; (2) the demand parameters; (3) the travel cost parameters; and (4) the construction cost parameters. We explore the effects of determining the location of an elevated road entrance and the tolls of road pricing on a simple spatial model with a welfare-maximizing objective of the government. The result also shows that, for a given set of tolls, the ratio of taking the elevated road is monotonically decreasing as the location of the entrance is set outward from the CBD. The socially optimal location of the entrance and the second-best toll are obtained from a set of numerical examples.