Road Pricing in a Serial Network

This paper presents a model of a transport system with two road links in a series that describes traffic patterns under various pricing regimes. We consider various mixes of road operation including private–public toll roads, free–private toll roads, and free– public toll roads. We derive the pricing rules and evaluate the economic welfare under alternative regimes. Inter-regional distribution of welfare is also discussed. It is shown that pricing rules applied by a public operator differ from those in a parallel network, and the relative efficiency of alternative regimes depends on the presence of road congestion. A mix of private and public toll roads attains higher economic welfare and lower disparity, especially in the presence of heavy congestion.