Suggested Citation:
Rouhani, Omid M. (2009) Road Privatization and Sustainability. Projections: MIT Journal of Planning 9, 82 - 105

Almost all road infrastructure is treated as a public good and seen as a governmental obligation. But roads differ from other public goods such as national defense in both non-rivalry and non- exclusiveness features. Moreover, Financing construction and maintenance of road infrastructure is challenging because in most countries, government revenues for road construction and maintenance are insufficient. Here, the idea of road privatization is introduced as a possible alternative. Although there are many political and societal hindrances in implementing this idea, its potential to solve problems in transportation is indisputable. The road owner pays the government for the externalities produced from his property (pollutions or accidents) but can make money by charging users (passing the externalities burden to users, while easing congestion and free rider problems) and because the road is privately constructed and owned, the opportunity cost of the road construction and maintenance is better accounted for. By assigning the road’s property to private sectors, the supply side might become more efficient based on the transformation from a publicly subsidized market to an open market framework. The equity problem of the new pricing scheme can be partially solved with a rebate policy similar to credit- based congestion pricing (CBCP).