On the Efficient Provision of Roads

67 Pages Posted: 8 Sep 2011

See all articles by Eduardo M. R. A. Engel

Eduardo M. R. A. Engel

Yale University - Department of Economics; National Bureau of Economic Research (NBER)

Ronald D. Fischer

University of Chile - Center of Applied Economics (CEA)

Alexander Galetovic

Universidad Adolfo Ibáñez; Stanford University - The Hoover Institution on War, Revolution and Peace; University of Padova - CRIEP

Date Written: March 19, 2009

Abstract

The main problem with road provision in developing countries is lack of maintenance, which leads to increased transportation costs. Other important problems are the inefficient choice of projects and excessive costs of construction. To a large extent, these problems are due to a poor institutional design of the public works authority that exacerbates a host of agency problems.

We explore alternatives to improve road provision policies both under the traditional model and when using public-private partnerships. We discuss in detail the principles that should underly the institutions in charge of the road sector in both cases, and analyze the extent to which institutions that exist in different countries come close to this ideal.

Keywords: bundling, control rights, organizational form, privatization, cost of public funds, inefficient spending, productive efficiency, road maintenance

JEL Classification: H21, H54, L51, R42

Suggested Citation

Engel, Eduardo M. and Fischer, Ronald D. and Galetovic, Alexander, On the Efficient Provision of Roads (March 19, 2009). Available at SSRN: https://ssrn.com/abstract=1924383 or http://dx.doi.org/10.2139/ssrn.1924383

Eduardo M. Engel (Contact Author)

Yale University - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States
203-432-5595 (Phone)
203-432-5779 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Ronald D. Fischer

University of Chile - Center of Applied Economics (CEA) ( email )

Republica 701
Casilla 2777
Santiago
Chile
+56/2/678 4055 (Phone)
+56/2/689 7895 (Fax)

Alexander Galetovic

Universidad Adolfo Ibáñez ( email )

Peñalolén
Santiago
Chile

Stanford University - The Hoover Institution on War, Revolution and Peace ( email )

Stanford, CA 94305-6010
United States

University of Padova - CRIEP ( email )

Padua
Italy

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