Urban Urban TransportationTransportation

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IntroductionIntroduction

The major problem facing the The major problem facing the transportation is congestion.transportation is congestion.

Congestion occurs because many Congestion occurs because many people prefer to travel at the same people prefer to travel at the same time and the transportation capacity time and the transportation capacity is fixed.is fixed.

Transportation MarketTransportation Market

Demand:Demand: Increased economic growth added to Increased economic growth added to

growth of automation.growth of automation.

More people prefer to use the same More people prefer to use the same road facilities at the same time.road facilities at the same time.

Short-Run Supply Short-Run Supply ConsiderationConsideration

Roads: Roads: Capacity exceeded during peak rush hours of Capacity exceeded during peak rush hours of

the day.the day.

We charge zero nominal prices for road We charge zero nominal prices for road usage ,so instead of prices allocating road usage ,so instead of prices allocating road space, time become the allocater.space, time become the allocater.

The problem of using transport capacity most The problem of using transport capacity most effeintly is one in which a third party effeintly is one in which a third party (government).(government).

Why a Third Party Why a Third Party Needed?Needed?

Because once a road near capacity , Because once a road near capacity , the average speed per car declines as the average speed per car declines as more car enter the road.more car enter the road.

Thus additional cars cause negative Thus additional cars cause negative externalities.externalities.

Negative externalitiesNegative externalities cause a cause a divergence to occur between the divergence to occur between the private marginal cost (MCp) of anther private marginal cost (MCp) of anther car entering the crowded road and car entering the crowded road and that car’s social cost (MCs).that car’s social cost (MCs).

Efficient Pricing Efficient Pricing of Existing Road Spaceof Existing Road Space

Each driver , will enter the road until Each driver , will enter the road until the P=MCp.the P=MCp.

Price represents the value of anther Price represents the value of anther car entering the road.car entering the road.

MCp represents the cost of the next MCp represents the cost of the next –best alternative route.–best alternative route.

The optimal number of cars is where: The optimal number of cars is where: price=MCsprice=MCs

Once Q0 cars are on the Once Q0 cars are on the road , additional cars road , additional cars slow others down, thus slow others down, thus MCs> MCp.MCs> MCp.

The point where society The point where society attains the optimal attains the optimal number of cars is where number of cars is where P=MCs, or Amount Q2.P=MCs, or Amount Q2.

But “rational” consumer But “rational” consumer will enter the road until will enter the road until Q1.Q1.

If society is to attain the If society is to attain the optimal use of road optimal use of road during peak hours, a during peak hours, a charge similar to P1P2, charge similar to P1P2, will have to be levied will have to be levied against users.against users.

This charge or toll This charge or toll would be exactly equal would be exactly equal to the difference to the difference between the Mcs and between the Mcs and MCp of the Q2th car. MCp of the Q2th car.

MCp

Q0 Q2 Q1

MCsC

ost

P1

P2

Number of cars

D

Other MethodsOther Methods

Higher Parking rate during peak Higher Parking rate during peak hours.hours.

Changing working hours.Changing working hours.

Car pollingCar polling

Long Run Supply Long Run Supply ConsiderationConsideration

The goal is to provide a level of The goal is to provide a level of capacity for all modes which capacity for all modes which maximize the satisfaction of society maximize the satisfaction of society

This is very difficult goal to meet:This is very difficult goal to meet: 1- it is difficult to forecast the 1- it is difficult to forecast the

preference of societypreference of society 2- Most transport planning is done 2- Most transport planning is done

by the public sector.by the public sector.

A Benefit – Cost Approach A Benefit – Cost Approach to Transport Planningto Transport Planning

B/C involves forecasting the benefit and B/C involves forecasting the benefit and cost over the expected life of the cost over the expected life of the transport project.transport project.

Discounting benefit and cost to their Discounting benefit and cost to their present value.present value.

Choose the project that maximize net Choose the project that maximize net benefit to society.benefit to society.

The difficulty is in listing all the expected The difficulty is in listing all the expected benefit and to put a Riyal value on these benefit and to put a Riyal value on these benefits. benefits.

Benefit MeasureBenefit Measure

We have to know what traffic patterns We have to know what traffic patterns and volumes will be in the future.and volumes will be in the future.

Benefits may be categorized as direct Benefits may be categorized as direct and indirect. and indirect.

Direct benefits include the time and Direct benefits include the time and operating cost saving to users of the operating cost saving to users of the expressway.expressway.

Indirect benefits (for non users) less Indirect benefits (for non users) less congestion, income distribution congestion, income distribution ( increase in price of land).( increase in price of land).

Cost MeasureCost Measure

Direct and indirect costDirect and indirect cost Direct cost : fixed and operating Direct cost : fixed and operating

cost.cost. Indirect cost: congestion occur at Indirect cost: congestion occur at

ramps to expressway, increased ramps to expressway, increased pollution. pollution.

Alternative Solution to Alternative Solution to CongestionCongestion

User chargeUser charge Express bus laneExpress bus lane Free transitFree transit