Private Provision of Highways: Economic Issues
AbstractThis paper reviews issues raised by the use of private firms to finance, build, and/or operate highways â€” issues including cost of capital, level and structure of tolls, and adaptability to unforeseen changes. The public sectorâ€™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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Bibliographic InfoPaper provided by University of California-Irvine, Department of Economics in its series Working Papers with number 080917.
Length: 36 pages
Date of creation: Feb 2009
Date of revision:
Privatization; Road finance; Toll road; Road pricing;
Other versions of this item:
- 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, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-02-28 (All new papers)
- NEP-PBE-2009-02-28 (Public Economics)
- NEP-PUB-2009-02-28 (Public Finance)
- NEP-URE-2009-02-28 (Urban & Real Estate Economics)
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