Integrated modeling framework for leasing urban roads: A case study of Fresno, California Omid M. Rouhani a,⇑ , Debbie Niemeier a , Christopher R. Knittel b , Kaveh Madani c a Department of Civil and Environmental Engineering, One Shields Avenue, University of California, Davis, United States b Sloan School of Management, Massachusetts Institute of Technology, 100 Main Street, E62-513, Cambridge, MA, United States c Department of Civil, Environmental, and Construction Engineering, University of Central Florida, Orlando, FL, United States article info Article history: Received 5 June 2012 Received in revised form 10 October 2012 Accepted 10 October 2012 Keywords: Urban road networks Privatization Ownership structure Public–private partnership Fresno California abstract Increasing private sector involvement in transportation services has significant implica- tions for the management of road networks. This paper examines a concession model’s effects on a road network in the mid-sized city of Fresno, California. Using the existing transportation planning models of Fresno, we examine the effects of privatization on a number of typical system performance measures including total travel time and vehicle miles traveled (VMT), the possibility of including arterials, and the differences between social cost prices and profit maximizing prices. Some interesting insights emerge from our analysis: (1) roads cannot be considered as isolated elements in a concession model for a road network; (2) roads can function as complements at some levels of demand and become substitutes at other levels; (3) policy makers/officials should consider privatiz- ing/pricing arterials along with privatizing highways; (4) temporally flexible but limited price schedule regulations should be part of leasing agreements; and (5) non-restricted pricing may actually worsen system performance, while limited pricing can raise enor- mous profits as well as improve system performance. Ó 2012 Elsevier Ltd. All rights reserved. 1. Introduction The first major public–private partnerships (PPPs or P3s) in the U.S. transport sector began in 1989 with the construction of the E-470 Tollway, east of Denver, Colorado. Since then, the private sector has made many investments in both existing and new highways through P3s (Reinhardt, 2011). Advocates of P3s have claimed that a significant amount of private invest- ment funding, ranging from $100 billion to $400 billion, is available to meet transportation needs in the U.S. This trend of increasing private sector involvement in transportation services has important, especially financial, implications for public road networks. Not only is this trend important for financing, but increased private sector involvement also has implications for quality of service, mitigation of environmental impacts, and addressing social issues (Chung et al., 2010; de Jong et al., 2010; Rouhani, 2009). Given the social and economic costs caused by congestion and unmet demand (Winkelman et al., 2010), properly developed P3 business models may play an important role in better understanding and addressing the challenges faced by urban transportation systems. Currently, P3 contracts include a wide range of models: BOT (Build-Operate-Transfer), BOO (Build-Own-Operate), DBFMO (Design-Build-Finance-Maintain-Operate), concession, etc. (Arup and PB, 2010; Zhang, 0191-2615/$ - see front matter Ó 2012 Elsevier Ltd. All rights reserved. http://dx.doi.org/10.1016/j.trb.2012.10.005 ⇑ Corresponding author. Tel.: +1 530 204 8576. E-mail addresses: omrouhani@ucdavis.edu (O.M. Rouhani), dniemeier@ucdavis.edu (D. Niemeier), knittel@mit.edu (C.R. Knittel), kmadani@ucf.edu (K. Madani). Transportation Research Part B 48 (2013) 17–30 Contents lists available at SciVerse ScienceDirect Transportation Research Part B journal homepage: www.elsevier.com/locate/trb