Road Damage Externalities and Road User Charges

David M Newbery

Econometrica, 1988, vol. 56, issue 2, 295-316

Abstract: Vehicles damage roads and, thus, increase road repair costs and create a road damage externality by raising the operating costs of subsequent vehicles. The main result is that if periodic road maintenance is condition responsive and if all road damage is attributable to traffic, then, in steady state with zero traffic growth, the average road damage externality is zero a nd the appropriate road damage charge is the average maintenance cost. Where weather accounts for some road damage, the road damage externality is no longer identically zero, but is quantitatively negligible. Road charges now recover a fraction of road costs. Copyright 1988 by The Econometric Society.

Date: 1988
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