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Journal article

Analysis of Public-Private Partnerships in Transportation Infrastructure Investment and Managementt

1 Jan 2011

Public-Private Partnerships (PPPs) in the infrastructure sector are agreements where private parties willingly agree to share responsibility with government agencies for (a subset of the following activities:) investment, finance, design, construction, renovation, maintenance, management, or operation of transportation facilities, e.g., roads, bridges, airports, parking facilities. In this dissertation, we present two economic models to analyze the stability of PPPs, and thus the successful execution of projects:

In the first part of the dissertation, we consider the effect of taxes and cost structure on investment viability. Specifically, we formulate a game-theoretic model of a concession agreement between a government and a private party, a concessionaire, who has to engage a set of service providers as part of the operating responsibilities. We use the model to examine the importance of a government's tax policy to induce private investments in transportation infrastructure. Our analysis brings to fore insights that are useful in the design of partnership agreements, such as the importance of early and binding government commitments to ensure stable partnerships, and thus, successful projects.

In the second part of the dissertation, we investigate pricing and capacity investment decisions on a congested transport corridor. The corridor used in this application can be an interstate highway, Trans European Networks, or an inter-modal connection. We use a serial network to model the simplest case: two zones linking in series, one zone subject to toll is considered as local zone, the other zone free of toll is considered as through traffic zone. There are two types of users: through users use both zones for various purposes such as travel or professional logistics services, local users only commute in local zone for work. We consider a two-stage game where government set capacity first in the through traffic zone and followed with private capacity decisions on local zone in the first stage, then we compare public and private pricing strategies in the second stage. We consider collaboration cases in the capacity stage by allowing government preferential consideration of private party's welfare.

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Publication Place: 
United States -- Illinois
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