Managing Road Capacity: Maintenance, Tolls, and Multi-Level Governance

Road congestion and deteriorating infrastructure impose substantial economic and social costs, with estimates reaching up to 1% of GDP in highly congested economies. At the same time, public finances are increasingly constrained, and reliance on the “user-pays” principle has grown, prompting greater use of tolling schemes and private participation in financing, operating, and maintaining road networks. This paper examines the interaction between road maintenance, capacity, and pricing decisions in contexts where different operators share responsibilities. We analyze whether private maintenance and tolling strategies converge toward socially optimal outcomes, and under what conditions misalignments occur. Policy implications for optimal pricing, investment incentives, and the design of capacity and maintenance are discussed.