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Assessing the Impact of Monopoly Toll Road Service Areas

Author

Listed:
  • John A. Spry

    () (University of St. Thomas)

  • Jocelyn Elise Crowley

    (Rutgers, The State University of New Jersey)

Abstract

The higher prices on the Garden State Parkway, the Atlantic City Expressway, and the New Jersey Turnpike found in this study demonstrate that consumers face increased prices when there is a government-created monopoly for service providers at rest areas instead of vigorous competition. Prices for gasoline are higher at service areas along the Garden State Parkway and the Atlantic City Expressway. Food prices are dramatically higher at service areas along the Garden State Parkway, the Atlantic City Expressway, and the New Jersey Turnpike. Consumers are clearly worse off when they are paying these marked-up food and gasoline prices on New Jersey's toll roads. As this research has demonstrated, consumer welfare along the GSP and NJT is annually reduced by $5,475,027 because of higher gasoline prices and $26,227,925 because of higher food prices. While these findings focus on the price and quantities of goods sold at monopoly service areas, economic theory also suggests that the quality of customer service may be reduced when competition is absent.

Suggested Citation

  • John A. Spry & Jocelyn Elise Crowley, 2004. "Assessing the Impact of Monopoly Toll Road Service Areas," Eastern Economic Journal, Eastern Economic Association, vol. 30(3), pages 393-409, Summer.
  • Handle: RePEc:eej:eeconj:v:30:y:2004:i:3:p:393-409
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume30/V30N3P393_409.pdf
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    More about this item

    Keywords

    Roads; Tolls;

    JEL classification:

    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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