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.