Starting with a ‘greenfield’ situation, we discuss reasons for market failure in road infrastructure provision. We show why it may not be optimal from a welfare perspective to leave road provision fully to the market and government intervention in this sector can improve welfare. Government intervention comes in different forms, such as financial intervention (taxation, subsidies), regulation (price, quality, environmental), and public provision of roads or road services. The analysis of the literature regarding government instruments allows us to establish a correspondence between different forms of market failure and instruments. Several case studies of particular road infrastructure projects are included to illustrate the use of government instruments.
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Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Documents with number
146.
Find related papers by JEL classification: L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy H4 - Public Economics - - Publicly Provided Goods
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