AFTER GRAPHICALLY ILLUSTRATING THE DIFFERENCE BETWEEN OPTIMAL INVESTMENT CRITERIA UNDER MARGINAL AND NON-MARGINAL COST PRICING, THE PAPER PRESENTS TWO MODELS OF THE EFFECTS OF PRICING POLICY ON OPTIMAL TIMING OF INVESTMENT IN TRANSPORT FACILITIES. IN THE FIRST MODEL OF PROPORTIONAL MARGINAL COST PRICING, IT WAS FOUND THAT THIS LED TO SLOWER EXPANSION OF CAPACITY THAN WHEN PRICE WAS EITHER HIGHER OR LOWER THAN MARGINAL COST. IN THE SECOND MODEL MARGINAL COST PRICING WAS COMPARED WITH COMMON FORMS OF USER FEES. IT WAS FOUND THAT THESE USER FEES LED TO NET BENEFIT STREAMS FOR CAPACITY EXPANSION INITIALLY LOWER THAN THAT FOR MARGINAL COST PRICING, ALTHOUGH THE OPPOSITE OCCURS WITH TIME. IT IS SHOWN HOW PLANNERS COULD DETERMINE THE POINT AT WHICH THE NET BENEFIT STREAMS ARE EQUAL IN ORDER TO PRODUCE THE SAME OPTIMAL EXPANSION DATES UNDER EITHER EXISTING OR MARGINAL COST PRICING POLICIES.
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