PRICING AND INVESTMENT IN A TRANSPORTATION NETWORK: THE CASE OF TORONTO AIRPORT. IN: AIR TRANSPORT

Abstract

In this paper, a transportation network model is applied to simulate Toronto International (Malton) Airport in order to determine marginal social cost prices of using Malton's facilities throughout the day. The results are then evaluated in terms of an economic surplus criterion to investigate policy issues such as whether congestion tolls should be assessed and the timing and location of additional airport capacity. The Canadian Ministry of Transport is proposing to build an international airport at Pickering, 30 miles northeast of Toronto, in order to alleviate future congestion and reduce noise at Malton. Findings suggest that congestion pricing should be introduced at Malton. It is further suggested that the expansion of airport facilities is not necessary until the mid-1980s, and that when expansion occurs it should initially occur at Malton rather than Pickering. These findings contradict the recommendations of the Ministry of Transport, which were made using engineering criteria for capacity expansion and comparisons of physical magnitudes of the two airport sites. However, transportation network models that incorporate prices and determine equilibrium flows represent an advance over these planning models.