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Private Investment and the US Transportation System

http://www.cnn.com/2011/OPINION/01/28/geddes.sotu.obama.infrastructure/index.html

In class, we discussed networks of roads and how “consumers” choose their routes based on predicted time length. While we briefly discussed different equilibriums and Braess’s Paradox of adding an additional road, we did not dive deeper into the values that different individuals may have for time of travel. This is an issue that has been underappreciated, especially in the US. Our publicly funded transportation system has been depreciating at a consistent rate and little has been done to keep this from occurring. One solution that has been proposed in this article is to shift towards private investment in the US transportation system – due to increased incentives and efficiencies, private entities could be more effective at developing roads with more advanced technology, constructing repairs at a quicker rate, implement traffic based tolls, and constructing less congested toll roads that run alongside current highways.

These last two points relate to our class because they directly deal with the value that drivers place on using certain roads. If we could more accurately determine these values, we could develop more efficient roads due to estimated traffic and route use. We can use Braess’s Paradox as an example: if we place an appropriate toll on the cross road that connects Route 1 with Route 2, only those who value the decrease in drive duration more than the toll will take that road. This will create a new equilibrium that divides the number of drivers on each route more evenly. While this could technically be done using public funding, it can be argued that government authorities lack the incentives to actively pursue this mission.

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