OPTIMAL DYNAMIC INVESTMENT POLICIES FOR PUBLIC FACILITIES: THE TRANSPORTATION CASE

Public facilities are characterized in this study by two attributes, quality and capacity, whose values are assumed to change over time due to natural factors, use and investments. It is also assumed that the users of the facility obtain a private benefit from the use of the facility, which is a function of the character-istics mentioned above and the total number of users. The objective is to find and analyze dynamic investment policies for quality and capacity that maximize the present value of the net social benefits derived from the operation of the public facility over a planning period [O,T). With this objective, dynamic models are developed using optimal control theory formulations which consider the investments in quality and capacity as control variables. Alternative assumptions are used with respect to the continuity or discretness of the investments and the dependence or independence between the demand for the facilit