Anytime you want to find the socially efficient level of anything, you
have to first understand what is keeping the prices from functioning
correctly within a market context. If there is nothing preventing
this, then current level of consumption should be that desired by
society (see more on social cost vs. private cost).
Ronald Coase, winner of the noble prize in economics, started the
property rights discussion involving externalities, or market
failures. He determined that the original owner did not matter as
long as bargaining and other coordination costs were low enough. In
the case of roads however there is no way to bargain. Pigou, as in
Pigouvian taxes, said that you have to tie the person doing the harm
to the price imposed on society. The person using something should
pay for it. This is not the case with roads.
In the case of roads the costs of accessing the system, each time, is
only the price of the person's time, and the gas (gas is the same
price no matter what road you use, or what time of day you drive).
There is no additional scheme available to take into account the costs
of other drivers. One scheme commonly thought of is the toll road.
This would charge people at peak time a greater price than that during
off-peak time. Assuming that only those who value road use at peak
time would submit to these higher tolls, the congestion would decrease
(to what extent is an empirical question). The resulting road usage
would be less, unless people are willing to pay greater tolls than
needed to maintain the road, in this case you would provide more road.
Finally, during off-peak time, there would be excess capacity (to the
tune of 30% or greater, citation available on request). This excess
capacity would likely bid the off-peak usage of roads to zero as long
as costs of maintenance were recovered during the peak usage hours.
The answer seems to be that the optimal amount of road is less. We
will never truly know unless we allow a market pricing strategy to
control road allocation. |
