Microeconomic theory and other concepts related to pricing are reviewed and applied to the problem of designing highway user charges. In view of the emphasis in the Congressional request for the Highway Cost Allocation Study on setting charges in accordance with costs occasioned, economic efficiency should be a major study goal. The goal of equity, whichever of its many meanings that term may have, remains an important consideration but not one which provides direct guidance for user charges. In regard to highway transportation, efficiency and equity do not appear to conflict in any significant ways.
Efficient user charges are based on variable costs, primarily pavement damage, vehicle interference, and negative external costs. In the absence of scale economies and inefficient investment, such user charges will exactly recover the full costs of constructing and operating the highway system. If residual costs remain, it is recommended that these costs be allocated to users by one of several methods for minimizing consumption distortions or improving equity. The several levels of government responsible for financing highways complicate the implementation of efficient user charges. The implementation problem is discussed, but no simple solution can be offered.
The material in this Volume expands on selected topics discussed in Volume I. It is intended to provide greater depth on the more imoportant issues co...
The Arizona Simplified Model for Highway Cost Allocation Studies (Arizona SMHCAS) was developed in 1999 as an alternative to the complicated model for...
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United States Department of Transportation
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