Arbeitspapier
Self-Financing Roads
Mohring and Harwitz (1962) showed that, under certain conditions, an optimally designed and priced road would generate user toll revenues just sufficient to cover its capital costs. Several scholars subsequently explored the robustness of that finding. This paper briefly summarizes further research on the relationship between congestion-toll revenues and road costs. Despite its transparency, the self-financing theorem can lead to erroneous interpretations. The paper’s second part discusses three such possible fallacies. It uses a simple numerical model to investigate them. The model shows that the naïve interpretation of the Mohring-Harwitz rule may lead to substantial welfare losses. These losses are particularly prominent when the difference between capital and investment cost is confused and when balanced-budget constraints are imposed under second-best network conditions. In contrast, losses from imposing a balanced-budget constraint when economies or diseconomies of scale exist are surprisingly small.
- Language
-
Englisch
- Bibliographic citation
-
Series: Tinbergen Institute Discussion Paper ; No. 07-068/3
- Classification
-
Wirtschaft
Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
Transportation Economics: Government Pricing and Policy
Externalities
- Subject
-
Traffic congestion
Road pricing
Road capacity choice
Road financing
Verkehrsstau
Straßenbenutzungsgebühr
Verkehrsplanung
Straßenbaufinanzierung
Verkehrsökonomik
Theorie
- Event
-
Geistige Schöpfung
- (who)
-
Verhoef, Erik T.
Mohring, Herbert
- Event
-
Veröffentlichung
- (who)
-
Tinbergen Institute
- (where)
-
Amsterdam and Rotterdam
- (when)
-
2007
- Handle
- Last update
-
10.03.2025, 11:45 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Verhoef, Erik T.
- Mohring, Herbert
- Tinbergen Institute
Time of origin
- 2007
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