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Privatizing Roads: an "Old" New Approach to Infrastructure Provision

Listed author(s):
  • Eduardo Engel
  • Ronald Fischer
  • Alexander Galetovic


During most of the twentieth century, highways, tunnels and bridges were viewed as public goods that had to be provided by the government. By the end of the century, however, chronic budgetary problems had led governments to allow participation of private firms in financing, building,and operating infrastructure projects. For example, worldwide private invest-ment in transport infrastructure went from almost nothing before 1990 to $10 billion in 1990–91 and almost $30 billion in 1997–98. Massive infras-tructure projects like the Second Severn Bridge in the UK, the Guangzhou-Shenzen highway in China, or the 1,000 miles of upgraded Panamerican Highway in Chile have been financed and are being operated by private firms. Even in the United States, cash-strapped Orange County of the early 90’s was unable to provide for needed expansion of the Riverside Freeway and resorted to private funding and operation. Thus, it has become increas-ingly accepted that private firms should finance, build, and operate roads, and that the revenues needed to pay for them should come from user fees rather than general funds. In view of these trends it is remarkable that only two private toll-roads were built in the United States during the twentieth century: the Dulles Greenway in Virginia and the 91 Express Lanes in Orange County, CA.

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Paper provided by Centro de Economía Aplicada, Universidad de Chile in its series Documentos de Trabajo with number 132.

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Date of creation: 2002
Handle: RePEc:edj:ceauch:132
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