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US Highway Privatization and Heterogeneous Preferences

Clifford Winston () and Jia Yan ()

No 2008-20, Working Papers from School of Economic Sciences, Washington State University

Abstract: Abstract: We assess the welfare effects of highway privatization accounting for government’s behavior in setting the sale price, firms’ strategic behavior in setting tolls in various competitive environments, and motorists’ heterogeneous preferences for speedy and reliable travel. We conclude motorists can benefit from privatization if they are able to negotiate aggressively with a private provider to obtain tolls and service that align with their varying preferences. Surprisingly, motorists are likely to be better off negotiating with a monopolist than with duopoly providers or under public-private competition. Toll regulation may be counterproductive because it would treat motorists as homogeneous. Revised June 2009.

Keywords: Security Breach Costs; Financial Distress; Insurance; Resource Allocation. (search for similar items in EconPapers)
Pages: 61 pages
Date: 2008-10
New Economics Papers: this item is included in nep-ias and nep-ure
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