LUẬN văn THẠC sĩ integrating travelers’ perceived factors in modeling the ceiling price of toll road a case study of BOT projects in vietnam

INTRODUCTION

The more rapidly the economy grows, the more greater demand for infrastructure are In most countries, infrastructure was built from the state budget

However, there are many items which need be spent by governmental budget and private capital is a good fund to complement these shortages Nowadays, more and more governments have encouraged private investor which take part in public investment projects Therefore, in order to support public infrastructure, Public Private Partnerships (PPPs) have become a major scheme (Hodge and Greve, 2007) and reduce public sector budget shortages (Kwak et al., 2009) PPPs are widely used to supply many infrastructure projects in the world Infrastructures invested by PPPs make economic efficiency increasing (Zhang, 2005) and facilitates the overall development of social infrastructure (Li et al., 2016b)

In Vietnam, according to Decree No 63/2018/ND-CP: “PPP” is an investment form which is carried out on the basis of a contract between the State and an investor, in order to construction, renovation, operation, business, management of infrastructure works, provision of public services

Build-Operate-Transfer (BOT) model is a form of PPP which has extensive applications in infrastructure projects The BOT scheme is gaining popularity and booming in public infrastructure around the world (Tan, 2012) It is adopted as an innovative way to sponsor for infrastructure construction in both developing and developed countries (Subprasom, 2004) In recent years, BOT arrangements have contributed to accelerating economic growth and improve quality service delivery and operation efficiency (Akintola et al., 2003)

In Vietnam, the Build-Operate-Transfer (BOT) scheme is considered as an attractive means by the Vietnamese government to develop new infrastructure projects According to Decree No.63/2018/ND-CP, parties involving in this contract project include: the government, private investor and travelers

Fig 1.1 Relationship between government, investor, travelers

Figure 1 show the relationship whole parties involved in First, the government and private sector sign an agreement for project Then investor constructed project by his own expense After the construction was completed, the investor carries out to provide service for users and travelers pay charge this serve When end of concession period, private investor gives project back government and government manages its

In Vietnam, BOT projects were started to widely carried out from 2011 Although there were only 18 projects in 2011, so they increased to 80 projects in 2015, and it is predicted to continuously increase in the future (Ministry of Transport report,

Fig 1.2 Number of BOT projects in Vietnam incl estimation

These projects have promoted the road traffic system in our country to develop quickly and synchronously According to the World Economic Forum (WEF), the service and quality of Vietnamese road transport infrastructure increased rapidly and ranked in the position of 92/137 countries in the word in 2017 (World Economic Forum, Global competitiveness Report, 2018)

Fig 1.3 Rank of Vietnam in the world about service and quality of road transport infrastructure

When choosing to travel on BOT roads, although length of road between BOT road and non BOT road are equivalent and travelers have to pay a significant fee, so they obtain more benefit himself, such as get higher speed, reduce travel time, save fuel consumption, feel comfortably travel as well as restrain collisions can be happened Thence, it can be raised economic efficiency for businesses and individuals Besides that, we can obtain social benefit as decreasing congestion and emissions causing environmental pollution According to the statistics of the Ministry of Transport, Noi Bai - Lao Cai Expressway is estimated to reduce travel time by 50% and cost by 30%; Hanoi - Vinh National Highway is estimated to reduces about 30% of travel time and 20% of cost; Highway No.14 through Dak Nong province is estimated to reduces about 30% of travel time and 6% of costs,

Fig 1.4 Comparison of benefit between BOT road vs non-BOT road

Length (Km) Speed (Km/h) Travel time (mins) Charge price (VND / turn) Smooth traffic Fuel consumption Emissions

Road invested by BOT project Road invested by Non-BOT project

Many studies have investigated the properties of BOT contracts and their design process To design a BOT contract, three critical parameters need to be considered: the length of the concession period, the infrastructure’s capacity and the toll Three variables are essential to a BOT road project They determine the social welfare for the whole society during the whole life of the road and the profit of the private firm during the concession period In the concession period, the private sector receives the revenue of charged tolls (Tam, 1999) Generally, service charge and capacity decisions are critical in a typical BOT contracting process, and the private sector has the power to determine both of them in the concession period The private sector aims to maximize its own profit and may charge a high service fee, which eventually hurts the social welfare and not many road users want to patronize the BOT roads (Carpintero and Gomez, 2011) Therefore the optimal BOT contract depends on whether the optimum toll is profitable (Guo and Yang, 2009) And it is necessary for the government to set some restraints on BOT toll price to not lead to a negative social welfare (Jing et al., 2008)

The carrying out of road toll in Vietnam goes through two stages, before and after the Decree No 18/2012/ND-CP about "fund of road maintenance and operation" took effect in January 2013 Before the Decree No 18/2012 / ND-CP took effect, we had

2 systems of toll stations, in which one system are used to toll for project invested by state budget Another system is served for project invested by BOT contract After the Decree No.18/2012/ND-CP took effect, all of toll station of project invested by state budget were removed (by Document No 2250/TTg-KTN in December 2012)

So, "the fund of road maintenance and operation" was born to get revenue for state budget in order to operate and maintain the projects invested by state budge

Meanwhile, all toll stations of BOT project are keeping remain The toll price of BOT road given by investor is set under the ceiling price that is regulated in Circular No

35/2016/TT-BGTVT and No 60/2018/TT-BGTVT, namely “Regulations for ceiling price of toll road” The ceiling prices vary across types of vehicles and this for heavier vehicles tends to be higher Two tables of ceiling prices below are officially set for national highway and expressway and applied to any toll roads all over the nation

Table 1.1 Ceiling Prices in National Highway

Ceiling price VND/ticket/turn

1 Vehicles has less than 12 seats, trucks under 2 tons; Buses 52,000

2 Vehicles has 12 - 30 seats, trucks with capacity 2 - 4 tons 70,000

3 Vehicles has more 31 seats, trucks with capacity 4 - 10 tons 87,000

4 Trucks with capacity 10 - 18 tons, 20 feet of container truck 140,000

5 Trucks with more capacity 18 tons, 40 feet of container truck 200,000

Table 1.2 Ceiling Prices in Expressway

Ceiling price VND/per km

1 Vehicles has less than 12 seats, trucks under 2 tons; Buses 2,100

2 Vehicles has 12 - 30 seats, trucks with capacity 2 - 4 tons 3,000

3 Vehicles has more 31 seats, trucks with capacity 4 - 10 tons 4,400

4 Trucks with capacity 10 - 18 tons, 20 feet of container truck 8,000

5 Trucks with more capacity 18 tons, 40 feet of container truck 12,000

At this time of December 2018, there were 46 road projects invested in BOT scheme are going on toll charge (Department Public Private Partnership - Ministry of Transport, 2018) Observed Prices of BOT Toll Roads, it can be seen that most of BOT toll road projects have applied charge that are nearly equal to the given ceiling prices Toll pricing observed in 46 BOT projects is presented in table as below:

Fig 1.5 Toll price in BOT scheme in Vietnam

For BOT project, the balance of benefit between: the government, private investor and travelers is most important However, the ceiling price at this Circular has some problem That is, (1) the scale of project has not been considered Projects with different initial investment, different capacity of road are all applied at this ceiling price This is not reasonable (2) The Willingness to pay of travelers and ability to

(1) - Vehicles has less than 12 seats, trucks with capacity under 2 tons;

(2) - Vehicles has 12 - 30 seats, trucks with capacity 2

(3) - Vehicles has more 31 seats, trucks with capacity 4

10 - 18 tons, 20 feet of container truck

(5) - Trucks with more capacity 18 tons, 40 feet of container truck

Charge price (thousand VND) Charge price (thousand VND)

LITERATURE REVIEW

Our research is closely related to the literature about toll and benefit under BOT contracts which attract a lot of attention A study discussed that a toll road getting benefit to private investor can make welfare falling for the whole highway network system (Mill, 1995) A simultaneous combination of concession period, road capability and toll price as a three variables occurred in BOT contract allows to optimize BOT contract in order to obtain maximum social welfare and gain an acceptable profit for private investor (Guo and Yang, 2009) In highway transportation network, the considering toll pricing under optimal combination of demand and capability of BOT road by bi-level programing formulas (Yang and Meng, 2000, 2002) Likewise, this model analyzed the influence of toll pricing to route choice of travelers and measured investor profit or social welfare of government (Chen and Subprasom, 2007) The toll level determined by the bi-level model was formulated to maximize social welfare while taking into account choice behavior of travelers (Yang and Zhang, 2003) A heterogeneous choice of travelers influents private profit and social welfare under various combinations of toll price and road capacity (Yang et al., 2002) In addition, the competition about toll and capacity occurred among roads (Xiao et al., 2007) The price is assumed to be a function of the travelling demand (Tan et al., 2010), considering on a simple two-road network, an equilibrium of traveling demand happened among travelers, leads to they will choose the road had minimum travel cost (Yates, 1992) Meanwhile National Highways Authority of India (NHAI) has set a formula for calculation of toll fee based on wholesale price index which is “the price of a representative basket of wholesale goods” (Government of India report, 2009)

Following those previous literatures, researchers have developed different models and almost studies focused on optimization of toll charge to balance private profit and social welfare However, the existing models have not determine: (1) toll ceiling price model for each BOT project, and (2) impact of "willingness to pay" of travelers to target of perspectives mentioned above.

METHODOLOGY

The model setting

As mentioned in Chapter 1, by the financial evaluation (i.e., NPV, IRR, breakeven year) and “Willingness to pay” of travelers, the project performances including private profit, social welfare and travelers’ benefit are considered in the decision process of BOT contract Particularly,

(1) Private investor's benefit is remaining profit after deducting initial construction expense from their revenue that obtain from toll charge in concession period interval, minus initial construction expense

(2) Government's benefit is welfare due to BOT road brings for society in concession period as well as until end of economic life of road

(3) Traveler's benefit is "willingness to pay" level to use BOT road

Subject to constraint conditions about benefit of private investor and the government, the optimal price will be found out Comparison this price with "willingness to pay" of travelers, the ceiling price of toll road will be set up for this BOT project

The above explanations can be conveyed by the multi-equation as follows:

Investor’s benefit = function of price = f1 (price) Government’s benefit = function of price = f1 (price) Travelers’ benefit = Willingness to pay

Subject to: Constraint of investor’s benefit and government’s benefit

The model is set up with a two-road network providing the transportation supply between two places Assume that, the government built a road links two places and they have been operating its In the future, in order to decrease the heavy traffic on the current road, the government plans to build a new road paralleling the existed road by a BOT scheme That is, the government will invite a private investor to build a BOT road by own investor cost Then they will operate this road and get revenue from road toll within concession period The private sector sets up the price of toll road for BOT road according to the market competition between two this roads

The BOT road is denote by 1 and the existing road is labeled by 2 The two-road network is illustrated as Figure, and some notation is give as follows: y1 : the BOT road capacity p1 : the toll charge of BOT road

Q1 : the flow volume on BOT road

I (y1) : Total investment of BOT road y2 : the existing road capacity

Fig 3.1 A network model p2 : the toll price of existing road

Q2 : the flow volume on existing road

M (Qi) : unit of maintenance and operation cost, assume that it is fixed

Q0 : total travel demand between two places

Ti (Qi, yi), i =1, 2: the generalized price (including travel cost and travel time) of each road

A bi-level programming model is formulated for a two-road network containing BOT road There are five steps with various issues to optimize toll charge and propose toll ceiling pricing for BOT project

Step 1: The lower-level program occurs between two road operators relating route choice behavior of travelers according to their travel cost Users' response depend on to each toll price which is set up by operators respectively

Step 2: The upper-level program represents the objective of decision makers In particular, operators determine the toll prices to maximize their own benefit respectively

Step 3: Evaluation social welfare through criteria named total travel cost difference under the scenario that there is BOT road and there is non BOT road

Step 4: Integrating the factor named "willingness to pay of travelers" to guarantee users' benefit

Step 5: Determining ceiling price of toll road under condition that optimal benefit of investor and the government, which taking into account "willingness to pay" of travelers.

Solution procedure

3.2.1 Step 1: Determining route choice of travelers

The route choice of travelers when facing to each price set up by operators depends on their objective is that minimize own travel cost Assume that the toll charge p1 is chosen by private investor and p2 is chosen by government The user travel cost function can be expressed as the Bureau of Public Roads (BPR) travel time function which was chosen because it is so widely used:

Ti (Qi, yi) is generalized price including travel cost and travel time λ is a parameter that transfers time to fare t0 is the free flow travel time α, β are parameters Without less of generalization, taking: α = β = 1

So, we have travel cost function, T1 for users choosing the BOT road:

T 1 Q 1 ,y 1 =λ.t 0 (1+Q 1 y 1 ) +p 1 (1a) Likewise, travel cost function, T2 for users choosing the existing road:

The objective function of travelers’ road choice for a given toll price is modelled as a standard user demand equilibrium according to the minimum travel cost, and can be expressed as follows: min, T 1 ( ) + T 2 ( ) (2)

Subject to: Q0 = Q1 + Q2 (3) The first term in Eq.(2) is total travel cost of users choosing BOT road to travel and the second term is total travel cost of users choosing existing road to travel

The Lagrange function for the problem Eq.(2) and Eq.(3) is as follows:

Where, μ is Lagrange multiplier corresponding with flow volume condition in Eq.(3)

The optimal condition of Eq.(2) and (3) is derivative of the Lagrange function with

T1 and T2 being nil respectively, can be described as follows:

∂T = T (Q ) + à = 0 (5b) Combined Eq.(5a), (5b) with (1a), (1b) we have: λ.t 0 (1+Q 1 y 1 ) +p 1 =λ.t 0 (1+Q 2 y 2 ) +p 2

Q = Q + Q Solve it, we can obtain:

We can see from Eq.(6a) and (6b) that the flow volume of roads are concern with toll price and capacity of roads in a road network

3.2.2 Step 2: The operators determine the toll prices to maximize their own benefit respectively

Based on the choice behavior of travelers, operators make decision for toll price to maximize their own benefit respectively

The benefit of BOT road is generated from toll revenue obtaining by toll charge of BOT road, and minus amount of initial construction cost and cost of maintenance and operation So, the operator will set up toll price level to maximize their own benefit

It can be presented as below: max(Q p − I(y ) − Q M) (7)

The first term in Eq.(7) is the revenue from toll price, the second term is initial investment expense, and the third term is cost of maintenance and operation

Substitute Q1 from Eq (6a) into function of Eq.(7), we have: y 1 y 2 y 1 +y

The optimal condition of Eq.(7) is derivative of the function in Eq.(8) with p1 being nil, can be described as follows:

So, p1 in Eq.(9) is the value of toll price so that the operator of BOT road get maximum his own benefit

Likewise, the benefit of existing road is generated from toll revenue obtaining by toll charge of BOT road, and only minus cost of maintenance and operation It can be presented as below: max(Q p − Q M) (10)

The first term in Eq.(10) is the revenue from toll price, the second term is cost of maintenance and operation

Substitute Q2 from Eq (6b) into function of Eq.(10), we have: y 1 y 2 y 1 +y

The optimal condition of Eq.(10) is derivative of the function in Eq.(11) with p2 being nil, can be described as follows:

So, p2 in Eq.(12) is the value of toll price so that the operator of existing road get maximum his own benefit

We are carrying out to evaluate social welfare by the criteria named total travel cost difference under the scenario that there is BOT road and there is non BOT road The total travel cost difference is defined that offsets of travel cost when there is only existing road for users travel, with travel cost when there are two road for user choose a road to travel Let D(p1, p2) be a total travel cost difference, can be described as follows:

The first item in Eq.(13) is travel cost of users when whole travelers use existing road, the second and third item are travel cost when users choose a route for their travel

We determine two scenarios: case 1 st is evaluation social welfare when all two roads get maximum their own benefit at the same time And case 2 nd is evaluation social welfare when there is only one of two road getting maximum his benefit – it is operator of BOT road

3.2.3.1 Case 1: All two roads get maximum their own benefit at the same time

That means, Eq.(9) and Eq.(12) simultaneously occur We have multi-equation:

Solve it, we obtain the value of p1 and p2 are p1* and p2* respectively p ∗ =λ t Q

(16), (14), (1a) and (1b) respectively into D (p1, p2) in Eq.(13), we can get the total travel cost difference in this case calculated in Appendix, and presented result as below:

Generally, the new road capacity is greater than that existing road, namely y1 ≥ y2

Consequently, D(p1*, p2*) ≤ 0, that mean the free competition leads to a negative social welfare

3.2.3.2 Case 2: Only BOT road get maximum his own benefit under condition that it is positive social welfare

That means, there is only Eq.(9) occur Substitute V1, V2, p1, T (Q0, y2), T1 (Q1, y1) and T2 (Q2, y2) in Eq.(6a), (6b), (9), (14), (1a) and (1b) respectively into D (p1, p2) in Eq.(13), we can get the total travel cost difference in this case calculated in Appendix, and presented result as below:

Social welfare is positive when total travel cost difference in Eq.(18) is greater than zero That means,

( +2 ) (19) Substitute p2 in Eq.(19) into Eq.(9), we get the p1 can be expressed as follows: p ≤ = +

The price, p1’ is the maximum value threshold of toll price for BOT road so that social welfare become positive

3.2.4 Step 4: Integrating the factor named "willingness to pay of travelers" to guarantee users' benefit

To guarantee benefit of travelers, the condition named “Willingness to pay” of travelers is set additionally and is compared with p1’ In order to estimate the

“Willingness to pay” of travelers for toll price in BOT road, this study is conducted by steps of Contingent Valuation Method according to survey questionnaire In which, open questions are used to interviewees so that they gave their own

“willingness to pay” pricing Then a series of bid question was given in order to determine amplitude of “willingness to pay” of travelers

Using Descriptive Statistic tool in Excel software in order to be statistic and calculate value of WTP

Using Regression tool in Excel software in order to analyze independent variables affecting WTP of travelers for toll price Variables in regression function include:

Age, Gender, Education level, Marital status, Career Status, Income, Travel

Frequency, Travel time acceptance level, Comfortableness level, Safe feeling level, and Charge pricing acceptance level

The regression function is described as follows:

WTP = C + a1.Age + a2.Gen + a3.Edu + a4.Mar + a5.Ca + a6.Inc + a7.Freq + a8.Time

C : intercept coefficient of regression model;

Edu : Education level of interviewee;

Mar : Married status of interviewee;

Freq : Travel frequency on BOT road of interviewee;

Time : Travel time acceptance level when travelling on BOT road of interviewee;

Comf : Comfortableness level when travelling on BOT road of interviewee;

Safe : Safe feeling level when travelling on BOT road of interviewee;

Toll : Charge pricing acceptance level when travelling on BOT road of interviewee

3.2.5 Step 5: Determining ceiling price of toll road under condition that optimal benefit of investor and the government, which taking into account "willingness to pay" of travelers

Ceiling price of toll road is set to be based on value of p1’ and WTP

Firstly, Ceiling price is not greater than maximum value of p1’ and WTP If not, according to result of 4.2.3.2 section, social welfare is negative

We consider this issue under two case, including case 1, p1’ is less than WTP and case 2, p1’ is greater than WTP

3.2.5.1 Case 1: If p 1 ’ is less than WTP (i.e p 1 ’ ≤ WTP)

In this case, it is clearly ceiling price is equal to p1’ because this price is to maximize investor’s benefit as well as make the social welfare positive, in which taking into account travelers’ benefit

3.2.5.2 Case 2: If p 1 ’ is greater than WTP (i.e p 1 ’ ≥ WTP)

In this case, we need to consider trade-off between private investor and travelers Following the Eq.(6a), we have: p = −

That means, the volume of BOT road will decrease as its toll charge is increasing and its capacity is decreasing Thus, there are some recommendation given for this case

3.2.5.2.1 Recommendation 1: Downscale capacity of BOT road

We are carrying out downscale capability of BOT road in order to find out the price (p’11) satisfying p’11 ≤ WTP Thus, ceiling price is set to be equal WTP

So, substitute into p’11 = WTP by p1 in Eq.(6a), the flow volume of BOT road corresponding this price can be calculated as follows:

Then, the downscale capacity of BOT road is equal to Q11

3.2.5.2.2 Recommendation 2: Keep capacity of BOT road

When the investor still keeps the capacity of BOT road, it is necessary to trade-off benefit of travelers and investor So, there must exist an equilibrium value belonging to range from WTP to p1’

See the Eq.(6a), it can be see that flow volume of BOT road a linear function of toll price, has the format:

Q = a P + b Where: Q is flow volume is calculated by Eq (6a) with variable is toll price, P

Likewise, the flow volume that is responses of users with another toll price was determined in a series of bid questions, also assume that it is also a linear function of price and has the format:

The equilibrium price value is root of equation: a P + b = a’ P + b’

So, the ceiling price of toll road is set to be equal to pe can be expressed as follows:

We conducted to examine the validation of Qe by comparing it with practical value,

Qr is determined from open questions about "willingness to pay" of toll price If Qe and Qr are approximately the same, the data collected is reasonable.

CASE STUDY

Introduction for case study

To applied the formula of toll ceiling price mentioned in Chapter 4, we are going to calculate for a particular case study A case study chosen is Pháp Vân - Cầu Giẽ Expressway (notation is PV-CG Expressway) It is located in Hanoi, Vietnam The road was constructed and operated by private investor in BOT scheme There is a existing road paralleling this expressway, namely National Highway 1A (notation is NH.1A) The NH.1A is managed by government

Two road are illustrated as follows:

Fig 4.1 PV-CG Expressway and NH.1A

Some useful parameters of two road is presented in table as below:

Table 4.1 Major parameters of two roads

Item Notation Unit PV-CG

Length of road Si Km 30 30

Capacity of road yi PCU/24h 158 400 52 800

Flow volume in 2030 year Qi PCU/24h 146 000 51 000

Cost of maintenance and operation

Current toll price for Car under 12 seats p VND/turn 35 000 0

Current toll price for Vehicle under 30 seats p VND/turn 45 000 0

(Source: Pháp Vân - Cầu Giẽ Expressway investment and construction project)

*** PCU = “Passenger car units” is defined as a car has under 12 seats.

Willingness to pay of travelers choosing this road to travel

In order to calculate the toll ceiling price mentioned in Chapter 4, there must be value of “Willingness to pay” of travelers choosing BOT road to travel A survey was carried out for residents living around this BOT road to determine WTP of users

There are two objects who were interviewed First, that is travelers who have car under 12 seats There are three locations which were chosen in order to conduct survey, is that: (1) Đại Thanh building locates in Thanh Trì district, (2) HH building

& CT3A-X2 building locates in Hoàng Mai district, and (3) Eco Green City building locates near the Ring Road No 3 The number of survey sample is 200 responses And secondly, that is travelers who have vehicle that has under 30 seats The location where was conducted to interview is Giáp Bát car station There was 100 interviews performed this place Because toll price level of two vehicles is different, there must be divided to objects like this

The characteristic of interviewees are described in table as follows:

Characteristic Travelers having car under

Travelers having vehicle under 30 seats

Gender Male (94%), Female (6%) Male (100%), Female (0%) Age (years old) Under 30 (7%),

Under 30 (4%), From 30 -39 (32%), From 40 -49 (46%), From 50 -59 (17%), Above 60 (1%) Education level Under high school (4%),

Under high school (100%), Intermediate school (0%), Bachelor (0%),

Master and Ph.D (0%) Marital status Married (93%), Single (7%) Married 100%, single 0%

Retirement (0%), Civil Servant (0%), Employee (0%), Employer (100%) Income per month

Under 20 millions (17%), From 20-30 millions (74%), Over 30 millions (10%)

Under 20 millions (0%), From 20-30 millions (40%), Over 30 millions (60%) Travel Frequency Under twice a week (89%),

Under twice a week (100%), Above twice a week (0%)

Using the Descriptive Statistic tool in Excel software in order to be statistic and calculate value of WTP The results is presented in table as follows:

Table 4.3 Descriptive statistic about WTP of travelers for toll price

Travelers has car under 12 seats

Determining toll ceiling price of BOT road

4.3.1 Case 1: Toll ceiling price for vehicle has under 12 seats

By the Chapter 4, first order needs to determine is the price p1’, that is the maximum value threshold of toll price for BOT road so that social welfare become positive: p ≤ = +

+2 (20) Where: y1 is capacity of BOT road, y1 = 158 400 (PCU/24h), y2 is capacity of NH.1A, y2 = 52 800 (PCU/24h),

Q0 is total flow volume, Q0 = Q1 + Q2 = 146 000 + 51 000 = 197 000 (PCU/24h),

M is cost of maintenance and operation, M = (70000 +850)/365 = 194 (millions/24h), t0 is free flow travel time, t0 = S / Vmax = 30 / 120 = 0.25 (hour) λ is parameter that transfer time to fare, is defined as the WTP to reduce travel time by one unit In which, WTP for travelers who has car under 12 seats is determined in Table 5.3, i.e WTP = 32 575 VNĐ /turn/car And the reduced travel time is average travel time difference on two roads, i.e Δt = 62 – 32 = 30 (min) = 0.5 (hour) Thus, value of λ is that, λ = WTP / Δt = 32 575 / 0.5 = 65 150 (VND/hour/car)

Substitute value of parameters above into Eq.(20), we obtain: p1’ = 48 882 (VNĐ/turn/car) Secondly the WTP of travelers is determined in table 5.3, we have:

Comparison values of p1’ with WTP, it can be seen that WTP < p1’, since there are two recommendation as mentioned in Chapter 4

The toll ceiling price is set to be equal to WTP:

Ceiling price = WTP = 32 575 (VND/turn/car)

So, the flow volume of BOT road can be calculated as follows:

Q 0 y 2 + 1 λ.t 0 (p 2 −WTP) (24) Where: y1 is capacity of BOT road, y1 = 158 400 (PCU/24h), y2 is capacity of NH.1A, y2 = 52 800 (PCU/24h),

Q0 is total flow volume, Q0 = 197 000 (PCU/24h),

M is cost of maintenance and operation, M = 194 (millions/24h), t0 is free flow travel time, t0 = 0.25 (hour), λ is parameter that transfer time to fare, λ = 65 150 (VND /hour/car), p2 is toll price of NH.1a, p2 = 0

Substitute value of parameters above into Eq.(24), we obtain:

Q11 = 68 550 (PCU/24h) Corresponding to number of lanes is that, n 11 =Q 11 y 1 n 1 Where: n1 is number of lanes of BOT road, n1 = 6 (lanes)

By the Eq.(6a), we have the function of flow volume and toll price, can be expressed:

The function of the flow volume that is responses of users with another toll price was determined in a series of bid questions, and toll price has equation:

Q = -4,7888 P + 234914 (In detail, see at Appendix) The equilibrium point is determined by Eq.(25a) and (25b):

Equilibrium price: pe = 36 973 (VND/turn/car) Equilibrium volume: Qe = 57 857 (PCU/24h)

Ceiling price = p e = 36 973 (VND/turn/car)

Qr is determined from direct questions about "willingness to pay" of toll price

Percentage of flow volume who accepted equilibrium price was determined as a formula, is that: ΔQ e =Q e

Meanwhile, percentage of flow volume who accepted equilibrium price was determined by the fact, is that: ΔQr = 40,71% (detail of calculation, see in Appendix) Error of value calculated by formula and by the fact is: Δ=|ΔQ e -ΔQ r| ΔQ e 100% = 40,71-39,63

That means, the formula of toll ceiling price is reasonable

4.3.2 Case 2: Toll ceiling price for vehicle has under 30 seats

By the standard namely TCVN 4054-2005, Highway – specifications for design, the vehicle has under 30 seats is equivalent to 2 times PCU

Likewise, by the Chapter 4, first order needs to determine is the price p1’, that is the maximum value threshold of toll price for BOT road so that social welfare become positive: p ≤ = +

+2 (20) Where: y1 is capacity of BOT road, y1 = 158 400 (PCU/24h) = 79 200 (vehicle/24h); y2 is capacity of NH.1A, y2 = 52 800 (PCU/24h) = 26 400 (vehicle/24h),

Q0 is total flow volume, Q0 = 197 000 (PCU/24h) = 98 500 (vehicle/24h)

M is cost of maintenance and operation, M = 194 (millions/24h), t0 is free flow travel time, t0 = 0.25 (hour) λ is parameter that transfer time to fare, λ = WTP / Δt = 37 450 / 0.5 = 74 900 (VND /hour/vehicle)

Substitute value of parameters above into Eq.(20), we obtain: p1’ = 56 423 (VNĐ/turn/vehicle) Secondly the WTP of travelers is determined in table 5.3, we have:

WTP = 37 450 (VNĐ/turn/vehicle) Comparison values of p1’ with WTP, it can be seen that WTP < p1’, since there are two recommendation as mentioned in Chapter 4

The toll ceiling price is set to be equal to WTP:

Ceiling price = WTP = 37 450 (VND/turn/vehicle)

So, the flow volume of BOT road can be calculated as follows:

Q 0 y 2 + 1 λ.t 0 (p 2 −WTP) (24) Where: y1 is capacity of BOT road, y1 = 79 200 (vehicle/24h); y2 is capacity of NH.1A, y2 = 26 400 (vehicle/24h),

Q0 is total flow volume, Q0 = 98 500 (vehicle/24h)

M is cost of maintenance and operation, M = 194 (millions/24h), t0 is free flow travel time, t0 = 0.25 (hour) λ is parameter that transfer time to fare, λ = 74 900 (VND /hour/vehicle) p2 is toll price of NH.1a, p2 = 0

Substitute value of parameters above into Eq.(24), we obtain:

Q11 = 34 275 (vehicle/24h) Corresponding to number of lanes is that, n 11 =Q 11 y 1 n 1 Where: n1 is number of lanes of BOT road, n1 = 6 (lanes)

By the Eq.(6a), we have the function of flow volume and toll price, can be expressed:

The function of the flow volume that is responses of users with another toll price was determined in a series of bid questions, and toll price has equation:

Q = -2,19 P + 121667 (In detail, see at Appendix) The equilibrium point is determined by Eq.(25a) and (25b):

Equilibrium price: pe = 42 197 (VND/turn/vehicle) Equilibrium volume: Qe = 29 255 (VND/turn/vehicle)

Ceiling price = p e = 42 197 (VND/turn/vehicle)

Qr is determined from direct questions about "willingness to pay" of toll price

Percentage of flow volume who accepted equilibrium price was determined as a formula, is that: ΔQ e =Q e

Meanwhile, percentage of flow volume who accepted equilibrium price was determined by the fact, is that: ΔQr = 43,39% (detail of calculation, see in Appendix)

Error of value calculated by formula and by the fact is: Δ=|ΔQ e -ΔQ r| ΔQ e 100% C,39-40,07

That means, the formula of toll ceiling price is reasonable.

Estimation WTP as regression function

Using the Regression tool in Excel software in order to analyze independent variables affecting WTP of travelers for toll price, including: Age, Gender, Education level, Marital status, Career Status, Income, Travel Frequency, Travel time acceptance level, Comfortableness level, Safe feeling level, and Charge pricing acceptance level

The regression function is described as follows:

WTP = C + a1.Age + a2.Gen + a3.Edu + a4.Mar + a5.Ca + a6.Inc + a7.Freq + a8.Time

C : Intercept coefficient of regression model;

Edu : Education level of interviewee;

Mar : Marital status of interviewee;

Ca : Job status of interviewee;

Freq : Travel frequency on BOT road of interviewee;

Time : Travel time acceptance level when travelling on BOT road of interviewee;

Comf : Comfortableness level when travelling on BOT road of interviewee;

Safe : Safe feeling level when travelling on BOT road of interviewee;

Toll : Charge pricing acceptance level when travelling on BOT road of interviewee

4.4.1 Case 1: Estimation WTP function of travelers have car under 12 seats

First, we consider objects who has car under 12 seats So, outcome of running regression model are showed in table as below:

Table 4.4 Regression Coefficient of WTP function of travelers who have car under 12 seats

Travel time acceptance level Time -0.542 0.6220

Charge pricing acceptance level Toll 3.089 2.972E-23

So, regression function is described as below:

WTP = 16,28 + 0,96.Gen + 0,642.Edu – 1,266.Mar + 0,267.Ca + 0,006.Age + 0,2.Inc

- 0,03.Freq – 0,542.Time + 0,709.Comf – 0,574.Safe + 3,089.Toll

The analytical results show that the multiple correlation coefficient (Multiple R) is approximately 0,746 at the same time, F is equal to 21,45 with Significance F is equal 7,74E-28, much smaller than 0.05 That explains that the selected linear regression model is very suitable

R-Square = 0,557 means that the independent variables in the model have explained about 55,7% of the variability of Y (Willingness to pay) The remaining 44,3% is due to random factors and other factors not included in the model

It can be seen that variables including: Gender, Education level, Marital status, Career status, Age, Travel time acceptance level, Comfortableness level, Safe feeling level, have P-value is greater than 0,05; that means these variables are not significant statistic in confidence level of 95%

Variables including: Income, Travel frequency, Charge pricing acceptance level, have P-value is less than 0,05; that means these variables are significant statistic in confidence level of 95%

Remove those variables which are not significant statistic in confidence level of 95% out of regression model At this time, the regression model of WTP has also independent variables including: Income, Travel frequency, Charge pricing acceptance level The regression function is described as:

So running again this model, and outcome is showed in table below

And regression function is described as follows:

Look at the result of regression function, it can be seen that income and charge pricing acceptance level are proportional to WTP, and travel frequency is inversely proportional to WTP In detail, when Income increases by 1 million VND per month, WTP of traveler will increase by 214 VND/turn/car When Travel Frequency increases by 1 traveling turn/year, WTP of traveler will decrease by 28 VND/turn/car

And when charge pricing acceptance level increase by 1 level, WTP of traveler will increase by 2 952 VND/turn/car

4.4.2 Case 2: Estimation WTP function of travelers have vehicle under 30 seats

Second, we consider objects who has car under 30 seats Seeing the table of Descriptive statistic above, it can be seen that variables including Gender, Education level, Marital status, Career status has statistic value of 100% Since, it is necessary to remove these variables out of the model At this time, the regression model of WTP has also independent variables including: Age, Income, Travel frequency, Travel time acceptance level, Comfortableness level, Safe feeling level and Charge pricing acceptance level

Thus, regression function is described as follows:

WTP = C + a1.Age + a2.Inc + a3.Freq + a4.Time + a5.Comf + a6.Safe + a7.Toll

So, outcome of running regression model are showed in table as below:

Thus, regression function is described as below:

WTP = 14,417C + 0,078.Age + 0,316.Inc -0,002.Freq -1,674.Time + 0,3125.Comf -

The analytical results show that the multiple correlation coefficient (Multiple R) is approximately 0,830 at the same time, F is equal to 29,16 with Significance F is equal 8,47E-21, much smaller than 0.05 That explains that the selected linear regression model is very suitable

R-Square = 0,689 means that the independent variables in the model have explained about 68,9% of the variability of Y (Willingness to pay) The remaining 31,1% is due to random factors and other factors not included in the model

It can be seen that variables including: Age and Safe feeling level, have P- value is greater than 0,05; that means these variables are not significant statistic in confidence level of 95%

Variables including: Income, Travel frequency, Travel time acceptance level, Comfortableness level and Charge pricing acceptance level, have P-value is less than 0,05; that means these variables are significant statistic in confidence level of 95%

Remove those variables which are not significant statistic in confidence level of 95% out of regression model At this time, the regression model of WTP has also independent variables including: Income, Travel frequency, Travel time acceptance level, Comfortableness level and Charge pricing acceptance level The regression function is described as:

WTP = C + a1.Inc + a2.Freq + a3.Time + a4.Comf + a5.Toll

So running again this model, and outcome is showed in table

And regression function is described as follows:

WTP = 17,928 + 0,32.Inc -0,003.Freq -1,792.Time + 2,928.Comf + 1,83.Toll

Look at the result of regression function, it can be seen that Income, Comfortableness level and Charge pricing acceptance level are proportional to WTP, and Travel frequency and Travel time acceptance level are inversely proportional to WTP In detail, when Income increases by 1 million VND per month, WTP of traveler will increase by 320 VND/turn/car When Travel Frequency increases by 1 traveling turn/year, WTP of traveler will decrease by 3 VND/turn/car When Travel time acceptance level increases by 1 level, WTP of traveler will decrease by 1792 VND/turn/car When Comfortableness increases by 1 level, WTP of traveler will increase by 2982 VND/turn/car When Charge pricing acceptance level increase by 1 level, WTP of traveler will increase by 1830 VND/turn/car.

CONCLUSION

Conclusion

This study solved the problem mentioned in Chapter 1 When taking into account “Willingness to pay” to toll charge, benefit of travelers was determined

Some important finding of ceiling price are summarized as follows:

(1) If government does not restrain toll price on BOT road, that leads to a negative social welfare

(2) There must exist the price (p1’) which is maximum threshold of toll price for BOT road in order that social welfare become positive

(3) Ceiling price is set to be equal to minimum of WTP and the price (p1’) If p1’ is less than WTP, Ceiling price is set up to p1’ If not, there are some recommendation including:

(3-1) Down to scale capacity of road in order to price p1’ decreases to be equal to WTP, and set up ceiling price to be equal to WTP

(3-2) Keeping the capacity of road and find out equilibrium price (pe) that make flow volume calculated by formula and one calculated by travelers’ response are equal, and set up ceiling price to be equal to pe.

Limitation

This study was considering a network has only two road In fact, a road infrastructure system include lot of roads and they interact each other about economy and society

Thus, in practical flow volume on each road can change by positive or negative trend

Therefore, the flow volume can not apply this formula mentioned in this study

In addition, the integrating travelers’ perceived factor to formula is weak

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Fig 0.1 Relationship between WTP and percentage acceptance travelers who has car under 12 seats

Fig 0.2 Relationship between WTP and percentage acceptance travelers who has car under 30 seats

Percentage of Flow Volume Percentage of Flow Volume

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