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Private Provision of Highways: Economic Issues

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Author Info
Kenneth A. Small () (Department of Economics, University of California-Irvine)

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Abstract

This paper reviews issues raised by the use of private firms to finance, build, and/or operate highways — issues including cost of capital, level and structure of tolls, and adaptability to unforeseen changes. The public sector’s apparent advantage in cost of capital is at least partly illusory due to differences in tax liability and to constraints on the supply of public capital. The evidence for lower costs of construction or operation by private firms is slim. Private firms are likely to promote more efficient pricing. Effective private road provision depends on well-structured franchise agreements that allow pricing flexibility, restrain market power, enforce a sound debt structure, promote transparency, and foster other social goals.

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File URL: http://www.economics.uci.edu/docs/2008-09/small-17.pdf
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Publisher Info
Paper provided by University of California-Irvine, Department of Economics in its series Working Papers with number 080917.

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Length: 36 pages
Date of creation: Feb 2009
Date of revision:
Handle: RePEc:irv:wpaper:080917

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Postal: Irvine, CA 92697-3125
Phone: (949) 824-5788
Web page: http://www.econ.uci.edu/
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Related research
Keywords: Privatization; Road finance; Toll road; Road pricing;

Find related papers by JEL classification:
H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
R42 - Urban, Rural, and Regional Economics - - Transportation Systems - - - Government and Private Investment Analysis

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Kenneth A. Small & Clifford Winston & Jia Yan, 2005. "Uncovering the Distribution of Motorists' Preferences for Travel Time and Reliability," Econometrica, Econometric Society, vol. 73(4), pages 1367-1382, 07. [Downloadable!] (restricted)
  2. de Palma, Andre & Lindsey, Robin, 2002. "Private roads, competition, and incentives to adopt time-based congestion tolling," Journal of Urban Economics, Elsevier, vol. 52(2), pages 217-241, September. [Downloadable!] (restricted)
  3. Kleven, Henrik & Kreiner, Claus Thustrup, 2006. "The Marginal Cost of Public Funds: Hours of Work versus Labor Force Participation," CEPR Discussion Papers 5594, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  4. Kleven, Henrik Jacobsen & Kreiner, Claus Thustrup, 2006. "The marginal cost of public funds: Hours of work versus labor force participation," Journal of Public Economics, Elsevier, vol. 90(10-11), pages 1955-1973, November. [Downloadable!] (restricted)
  5. Dewatripont, Mathias & Legros, Patrick, 2005. "Public-private partnerships: contract design and risk transfer," EIB Papers 5/2005, European Investment Bank, Economic and Financial Studies. [Downloadable!]
  6. Ian W. H. Parry & Kenneth A. Small, 2005. "Does Britain or the United States Have the Right Gasoline Tax?," American Economic Review, American Economic Association, vol. 95(4), pages 1276-1289, September. [Downloadable!]
    Other versions:
  7. Erik T. Verhoef & Kenneth A. Small, 2004. "Product Differentiation on Roads," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 38(1), pages 127-156, January. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Clifford Winston & Jia Yan, 2008. "US Highway Privatization and Heterogeneous Preferences," Working Papers 2008-20, School of Economic Sciences, Washington State University. [Downloadable!]
Statistics
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This page was last updated on 2009-11-22.

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