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Cost Recovery from Optimally Designed Roads

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  • Newbery, David M

Abstract

If vehicles are charged for the road damage they cause, only a fraction of maintenance costs will be recovered. This paper proves that with constant returns to scale in construction and use, the balance, together with interest on the capital cost, will be recovered by congestion charges. Congestion costs are calculated for Britain, and shown to slightly exceed the total recurrent highway costs and interest on the capital value. Copyright 1989 by The London School of Economics and Political Science.

Suggested Citation

  • Newbery, David M, 1989. "Cost Recovery from Optimally Designed Roads," Economica, London School of Economics and Political Science, vol. 56(222), pages 165-185, May.
  • Handle: RePEc:bla:econom:v:56:y:1989:i:222:p:165-85
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    Cited by:

    1. Yang, Hai & Meng, Qiang, 2000. "Highway pricing and capacity choice in a road network under a build-operate-transfer scheme," Transportation Research Part A: Policy and Practice, Elsevier, vol. 34(3), pages 207-222, April.
    2. Link, Heike, 2006. "An econometric analysis of motorway renewal costs in Germany," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(1), pages 19-34, January.
    3. repec:eee:retrec:v:62:y:2017:i:c:p:68-79 is not listed on IDEAS
    4. Robin Lindsey, 2006. "Do Economists Reach A Conclusion on Road Pricing? The Intellectual History of an Idea," Econ Journal Watch, Econ Journal Watch, vol. 3(2), pages 292-379, May.
    5. Dong, Baomin & Guo, Guixia & Wang, Yuntong, 2012. "Highway toll pricing," European Journal of Operational Research, Elsevier, vol. 220(3), pages 744-751.
    6. Santos, Georgina & Behrendt, Hannah & Maconi, Laura & Shirvani, Tara & Teytelboym, Alexander, 2010. "Part I: Externalities and economic policies in road transport," Research in Transportation Economics, Elsevier, vol. 28(1), pages 2-45.
    7. Erik T. Verhoef & Jan Rouwendal, 2004. "Pricing, Capacity Choice, and Financing in Transportation Networks," Journal of Regional Science, Wiley Blackwell, vol. 44(3), pages 405-435.
    8. Affuso, L. & Masson, J. & Newbery, D.M., 2000. "Comparing Investment on New Transport Infrastructure: Roads vs. Railways?," Cambridge Working Papers in Economics 0021, Faculty of Economics, University of Cambridge.
    9. de Palma, André & Lindsey, Robin, 2007. "Chapter 2 Transport user charges and cost recovery," Research in Transportation Economics, Elsevier, vol. 19(1), pages 29-57, January.
    10. Link, Heike & Nilsson, Jan-Eric, 2005. "Infrastructure," Research in Transportation Economics, Elsevier, vol. 14(1), pages 49-83, January.
    11. Button, Kenneth, 2004. "1. The Rationale For Road Pricing: Standard Theory And Latest Advances," Research in Transportation Economics, Elsevier, vol. 9(1), pages 3-25, January.
    12. Heike Link, 2003. "Estimates of marginal infrastructure costs for different modes of transport," ERSA conference papers ersa03p75, European Regional Science Association.
    13. Chu, Xuehao, 1999. "Alternative congestion pricing schedules," Regional Science and Urban Economics, Elsevier, vol. 29(6), pages 697-722, November.
    14. Tsai, Jyh-Fa & Chu, Chih-Peng, 2010. "Analysis of the optimal length of road expansion - A case study of the Taipei metropolitan area," Transportation Research Part A: Policy and Practice, Elsevier, vol. 44(3), pages 147-158, March.
    15. Rizzi, Luis Ignacio & De La Maza, Cristobal, 2017. "The external costs of private versus public road transport in the Metropolitan Area of Santiago, Chile," Transportation Research Part A: Policy and Practice, Elsevier, vol. 98(C), pages 123-140.
    16. Chu, Chih-Peng & Tsai, Jyh-Fa, 2008. "The optimal location and road pricing for an elevated road in a corridor," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(5), pages 842-856, June.
    17. Luis Rizzi, 2008. "Integrating Travel Delays, Road Safety, Care, Vehicle Insurance and Cost-Benefit Analysis of Road Capacity Expansion in a Unified Framework," Networks and Spatial Economics, Springer, vol. 8(2), pages 125-140, September.
    18. Erik T. Verhoef, 2012. "Cost Recovery of Congested Infrastructure under Market Power," Tinbergen Institute Discussion Papers 12-064/3, Tinbergen Institute.
    19. Erik T. Verhoef & Herbert Mohring, 2007. "Self-Financing Roads," Tinbergen Institute Discussion Papers 07-068/3, Tinbergen Institute.
    20. repec:eee:juecon:v:101:y:2017:i:c:p:45-56 is not listed on IDEAS
    21. de Rus, Gines & Nombela, Gustavo, 2003. "Concesiones de plazo variable para la construcción y explotación de autopistas
      [Variable-term concessions for road construction and operation]
      ," MPRA Paper 12653, University Library of Munich, Germany.

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