Private provision of local rural roads

Cathy A. Hamlett

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: The rural road and bridge problem is the lack of funds to upgrade and maintain the rapidly deteriorating rural transportation infrastructure. The research analyzed the concept of privately provided public roads through a utility maximization model, with a joint product aspect. The jointness coming from the private, public benefits of a road. Equilibrium conditions of road provision, under Nash-Cournot behavior, were derived. A comparative static analysis was conducted on the Nash-Cournot model. Pareto-optimizing behavior was also investigated and the results compared to Nash-Cournot provision levels. The Pareto-optimal model indicated conditions where a set of roads could be abandoned;A benefit-cost analysis was conducted to identify the set of abandonable roads. Low-traffic roads were abandoned or converted to private drives through the use of a computerized road network. The results indicate that potential exists for closing some roads to public access;An investigation was made into the political implications of such policies. The decision of public provision of roads is made by a body of elected officials who are susceptible to pressure. An example presents an illustration of economic incentive rural residents have to fight the road conversion policies.

Date: 1987-01-01
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