1. Urban Transportation 6

2. Introduction The major problem facing the transportation is congestion. The major problem facing the transportation is congestion. Congestion occurs because many people prefer to travel at the same time and the transportation capacity is fixed. Congestion occurs because many people prefer to travel at the same time and the transportation capacity is fixed.

3. Transportation Market Demand: Demand: Increased economic growth added to growth of automation. Increased economic growth added to growth of automation. More people prefer to use the same road facilities at the same time. More people prefer to use the same road facilities at the same time.

4. Short-Run Supply Consideration Roads: Roads: Capacity exceeded during peak rush hours of the day. Capacity exceeded during peak rush hours of the day. We charge zero nominal prices for road usage,so instead of prices allocating road space, time become the allocater. We charge zero nominal prices for road usage,so instead of prices allocating road space, time become the allocater. The problem of using transport capacity most effeintly is one in which a third party (government). The problem of using transport capacity most effeintly is one in which a third party (government).

5. Why a Third Party Needed? Because once a road near capacity, the average speed per car declines as more car enter the road. Because once a road near capacity, the average speed per car declines as more car enter the road. Thus additional cars cause negative externalities. Thus additional cars cause negative externalities. Negative externalities cause a divergence to occur between the private marginal cost (MCp) of anther car entering the crowded road and that car’s social cost (MCs). Negative externalities cause a divergence to occur between the private marginal cost (MCp) of anther car entering the crowded road and that car’s social cost (MCs).

6. Efficient Pricing of Existing Road Space Each driver, will enter the road until the P=MCp. Each driver, will enter the road until the P=MCp. Price represents the value of anther car entering the road. Price represents the value of anther car entering the road. MCp represents the cost of the next –best alternative route. MCp represents the cost of the next –best alternative route. The optimal number of cars is where: price=MCs The optimal number of cars is where: price=MCs

7. Once Q0 cars are on the road, additional cars slow others down, thus MCs> MCp. The point where society attains the optimal number of cars is where P=MCs, or Amount Q2. But “rational” consumer will enter the road until Q1. If society is to attain the optimal use of road during peak hours, a charge similar to P1P2, will have to be levied against users. This charge or toll would be exactly equal to the difference between the Mcs and MCp of the Q2th car. MCp Q0Q2Q1 MCs Cost P1 P2 Number of cars D

8. Other Methods Higher Parking rate during peak hours. Higher Parking rate during peak hours. Changing working hours. Changing working hours. Car polling Car polling

9. Long Run Supply Consideration The goal is to provide a level of capacity for all modes which maximize the satisfaction of society The goal is to provide a level of capacity for all modes which 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 preference of society 1- it is difficult to forecast the preference of society 2- Most transport planning is done by the public sector. 2- Most transport planning is done by the public sector.

10. A Benefit – Cost Approach to Transport Planning B/C involves forecasting the benefit and cost over the expected life of the transport project. B/C involves forecasting the benefit and cost over the expected life of the transport project. Discounting benefit and cost to their present value. Discounting benefit and cost to their present value. Choose the project that maximize net benefit to society. Choose the project that maximize net benefit to society. The difficulty is in listing all the expected benefit and to put a Riyal value on these benefits. The difficulty is in listing all the expected benefit and to put a Riyal value on these benefits.

11. Benefit Measure We have to know what traffic patterns and volumes will be in the future. We have to know what traffic patterns and volumes will be in the future. Benefits may be categorized as direct and indirect. Benefits may be categorized as direct and indirect. Direct benefits include the time and operating cost saving to users of the expressway. Direct benefits include the time and operating cost saving to users of the expressway. Indirect benefits (for non users) less congestion, income distribution ( increase in price of land). Indirect benefits (for non users) less congestion, income distribution ( increase in price of land).

12. Cost Measure Direct and indirect cost Direct and indirect cost Direct cost : fixed and operating cost. Direct cost : fixed and operating cost. Indirect cost: congestion occur at ramps to expressway, increased pollution. Indirect cost: congestion occur at ramps to expressway, increased pollution.

13. Alternative Solution to Congestion User charge User charge Express bus lane Express bus lane Free transit Free transit