IDEAS home Printed from https://ideas.repec.org/p/edj/ceauch/209.html
   My bibliography  Save this paper

Privatizing Highways in the United States

Author

Listed:
  • Eduardo Engel
  • Ronald Fischer

    ()

  • Alexander Galetovic

Abstract

Major increases in congestion over the last two decades, combined with troubled government finances, have made private toll-roads increasingly attractive in the United States. Road privatization consists in having a private firm build, operate and maintain the road for many decades. The main (often only) source of income for the franchise holder is toll revenue. We review the experience of both private toll-roads built in the United States during the 1990s, and argue that the problems they encountered could have been avoided if the length of the franchise contract had adapted to demand realizations. We also argue in favor of adjudicating private toll-roads in competitive (Demsetz) auctions. Both advantages are attained if the highway is auctioned to the firm that bids the least present value of toll revenue (PVR), an approach we discuss in detail throughout the paper.

Suggested Citation

  • Eduardo Engel & Ronald Fischer & Alexander Galetovic, 2005. "Privatizing Highways in the United States," Documentos de Trabajo 209, Centro de Economía Aplicada, Universidad de Chile.
  • Handle: RePEc:edj:ceauch:209
    as

    Download full text from publisher

    File URL: http://www.dii.uchile.cl/~cea/sitedev/cea/www/download.php?file=documentos_trabajo/ASOCFILE120050905174916.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Guasch, J. Luis & Laffont, Jean-Jacques & Straub, Stephane, 2003. "Renegotiation of concession contracts in Latin America," Policy Research Working Paper Series 3011, The World Bank.
    2. Adams, Matthew & Hiatt, Rachel & Hill, Mary C. & Russo, Ryan & Wachs, Martin & Weinstein, Asha, 2001. "Financing Transportation in California: Strategies for Change (Final Draft)," Institute of Transportation Studies, Research Reports, Working Papers, Proceedings qt7fh2v7zd, Institute of Transportation Studies, UC Berkeley.
    3. Clifford Winston, 2000. "Government Failure in Urban Transportation," Fiscal Studies, Institute for Fiscal Studies, vol. 21(4), pages 403-425, December.
    4. Eduardo M. R. A. Engel & Ronald D. Fischer & Alexander Galetovic, 2001. "Least-Present-Value-of-Revenue Auctions and Highway Franchising," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 993-1020, October.
    5. Patrick Bajari & Stephanie Houghton & Steve Tadelis, 2006. "Bidding for Incomplete Contracts: An Empirical Analysis," NBER Working Papers 12051, National Bureau of Economic Research, Inc.
    6. J. Luis Guasch, 2004. "Granting and Renegotiating Infrastructure Concessions : Doing it Right," World Bank Publications, The World Bank, number 15024, November.
    7. Engel, Eduardo & Fischer, Ronald D & Galetovic P., Alexander, 1998. "Infrastructure franchising and government guarantees," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34378, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    8. Engel, Eduardo & Fischer, Ronald D & Galetovic P., Alexander, 1998. "Infrastructure franchising and government guarantees," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34378, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    9. Eduardo Engel & Ronald Fischer & Alexander Galetovic, 2003. "Privatizing Highways in Latin America: Fixing What Went Wrong," ECONOMIA JOURNAL, THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION - LACEA, vol. 0(Fall 2003), pages 129-164, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Viegas, José M., 2010. "Questioning the need for full amortization in PPP contracts for transport Infrastructure," Research in Transportation Economics, Elsevier, vol. 30(1), pages 139-144.
    2. Winston, Clifford & Yan, Jia, 2011. "Can privatization of U.S. highways improve motorists' welfare?," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 993-1005, August.
    3. de Brux, Julie, 2010. "The Dark and Bright Sides of Renegotiation: An Application to Transport Concession Contracts," Utilities Policy, Elsevier, vol. 18(2), pages 77-85, June.
    4. Athias, Laure & Saussier, Stéphane, 2007. "Contractual flexibility or rigidity for public private partnerships? Theory and evidence from infrastructure concession contracts," MPRA Paper 10541, University Library of Munich, Germany.
    5. Klein, Peter G. & Mahoney, Joseph T. & McGahan, Anita M. & Pitelis, Christos N., 2009. "Toward a Theory of Public Entrepreneurship," Working Papers 09-0106, University of Illinois at Urbana-Champaign, College of Business.
    6. Jean-Michel Glachant & Stéphane Saussier, 2006. "Introduction," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 29(1), pages 1-2, September.
    7. Daniel Albalate & Paula Bel-Piñana, 2016. "Winners and losers in tolled motorway renegotiations: an empirical evaluation of the Spanish pioneers," Public Money & Management, Taylor & Francis Journals, vol. 36(5), pages 365-372, July.
    8. repec:eee:transa:v:111:y:2018:i:c:p:174-186 is not listed on IDEAS
    9. Rouhani, Omid M. & Niemeier, Debbie & Knittel, Christopher R. & Madani, Kaveh, 2013. "Integrated modeling framework for leasing urban roads: A case study of Fresno, California," Transportation Research Part B: Methodological, Elsevier, vol. 48(C), pages 17-30.
    10. Geddes, R. Richard & Wagner, Benjamin L., 2013. "Why do U.S. states adopt public–private partnership enabling legislation?," Journal of Urban Economics, Elsevier, vol. 78(C), pages 30-41.
    11. Desrieux, Claudine & Chong, Eshien & Saussier, Stéphane, 2013. "Putting all one's eggs in one basket: Relational contracts and the management of local public services," Journal of Economic Behavior & Organization, Elsevier, vol. 89(C), pages 167-186.
    12. Athias, Laure & Nunez, Antonio, 2008. "The more the merrier? Number of bidders, information dispersion, renegotiation and winner’s curse in toll road concessions," MPRA Paper 10539, University Library of Munich, Germany.
    13. Clifford Winston & Jia Yan, 2008. "US Highway Privatization and Heterogeneous Preferences," Working Papers 2008-20, School of Economic Sciences, Washington State University.
    14. Athias, Laure, 2007. "Political accountability, incentives, and Contractual design of public private partnerships," MPRA Paper 10538, University Library of Munich, Germany.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:edj:ceauch:209. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/ceuclcl.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.