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Review of Industrial Organization

, Volume 29, Issue 1–2, pp 27–53 | Cite as

Privatizing Highways in the United States

  • Eduardo EngelEmail author
  • Ronald Fischer
  • Alexander Galetovic
Article

Abstract

We review the experience of both private toll-roads built in the United States during the 1990s, and argue that the problems they encountered could have been avoided if the length of the franchise contract would adapt to demand realizations. We also argue in favor of adjudicating private toll-roads via BOT-type contracts in competitive (Demsetz) auctions. The lessons of this paper are relevant since growing congestion and troubled government finances have made private toll-roads increasingly attractive in the United States.

Keywords

BOT contracts cost-of-funds Demsetz auction privatization subsidies 

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Copyright information

© Springer 2006

Authors and Affiliations

  • Eduardo Engel
    • 1
    Email author
  • Ronald Fischer
    • 2
  • Alexander Galetovic
    • 3
  1. 1.Department of EconomicsYale UniversityNew HavenUSA
  2. 2.Center for Applied Economics (CEA), Department of Industrial EngineeringUniversity of ChileSantiagoChile
  3. 3.Facultad de Ciencias Económicas y EmpresarialesUniversidad de Los AndesSantiagoChile

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