Essays on Optimal Transport Infrastructure Development
Abu Nur Rashed Ahmed (PHD10202
The paper investigates the optimal long-run transport infrastructure development policy under a
constraint that the transport authority naively invests all the toll revenues. The study finds that
unlike in the first best the second-best pricing policy must include an adjustment term to correct
the distortion caused by such naïve behavior, and the welfare loss compared to the first best is
around several percent.
The thesis is mainly consisted of theoretical work including simulation. The candidate’s
dissertation investigates the optimal policy concerning transport network development under
different settings and conditions. Specifically it is consisted of three parts, namely (a) the
optimal urban transport improvement in a general settings by considering land-use model, (b)
the optimal design of a circumferential highway within a city model, and (c) welfare recovery
when the highway investment is made according to "investment cost" policy and not according
to "capital cost" policy (naïve policy with short run marginal cost pricing) with a view to
achieve long-run self- financing.
There are several revision requests made by the examiners, and corresponding satisfactory
revisions have been made by the candidate as follows.
Item No Description
Corrected Accordingly in Figure 7 in the slide and
1 Correct Figure 7, LRMC, SRMC
Present Hamiltonian for FB and
2 SB
Figure 4.1 (Chapter 4) in Thesis.
I have presented Hamiltonian for FB and SB in the
Definition of Naïve Policy should
3 cover SB as well
Added in section 4-3-1 (chapter 4) Pg. 76. in Thesis.
When P in SB is equal to P in FB?
4 i.e., when Mu=1/GI?
Robustness check is needed In
5 Simulation
Added in section 4-3-1 (chapter 4) Pg. 79.
Robustness check is provided (See figure 4.2 of
section 4.3.2) Pg. 83 in Thesis.
Interest rate. Lower interest rate recovers welfare
Significantly. However, at higher interest rate
welfare recovery is less. When interest rate is zero,
there is no welfare loss. When interest rate=2%,
Welfare Index for Naive Policy is 1.0767 and for SB
is 1.0642. When interest rate=10%, Welfare Index
for Naive Policy is 1.1666 and for SB is 1.1343.
Thus, at 2% (lower) interest rate, SB Policy recover
welfare 2.58%
more than that at(10%) higher
interest rate. Other parameters like demand elasticity
Check which parameter is crucial
5(1) to reduce the welfare significantly
does not show significant effect in reducing welfare.
Pg. 87 in Thesis.
Interest rate of 0.025 is too low.
We change the vaue of r. Now r=5%. Also the
See if r higher, difference between
welfare index is checked with various r. (Figure 4.7).
FB and SB or SB and Naïve
For higher r, difference between FB and SB and SB
5(2) Policy becomes bigger or not.
and Naïve Policy found bigger. Pg. 87 in Thesis.
We compare welfare in FB, SB and Naive policy. To
compare welfare between different policies, we used
Compare welfare in FB, SB and
6 Naïve Policy.
Welfare loss of Naïve Policy
6(1) relative to FB
a welfare index defined in Equation (4.41) (Pg. 82 in
Thesis) and followed by De Palma et al. (2012).
The welfare index for naïve policy relative to FB is
1.1427 (114.27%). Pg. 85 in Thesis.
The welfare index for SB relative to FB is 1.0838
(108.38%). The welfare recovery = 1.1427 - 1.0838
Welfare recovery of SB from
6(2) Naïve Policy i
Dissertation Abstract as well
7 introduction must be polished
= 0.0589 (5.89% of the FB Welfare).
Pg. 85 in
I revised the Abstract and Introduction. Pg. i and Pg.
1 in Thesis.
Though the writing in some parts are still rough hewn, the findings and results contain some net
contribution to the existing literature. It is expected that a few papers will be generated as
publishable-quality with a minor revision to the work already completed.
Examiners and advisers are
Takashi Fukushima
Tetsushi Sonobe
Keisuke Kawata (Hiroshima University)