AN ECONOMIC ANALYSIS OF HIGHWAY SERVICES.

This article presents an economic analysis of highway services in the United States. In the United States the government provides public highways on which individuals operate vehicles largely at their own discretion, within defined safety regulations. In recent years many highways have become congested, and the government has attempted to relieve congestion by building more roads. The first section of this article will be devoted to a model of the market for highway services--the demand for and supply of space on the highways. It will be seen that congestion is, in part at least, the economic response to the existing method of highway pricing. The second section will use the model to suggest why government policy, oriented almost entirely towards expanding the highway system, has failed to resolve the congestion problem. It is assumed that a single governmental unit provides public highways that are utilized by a single class of private vehicles. Nominal operating costs per vehicle-mile include time, fuel, tire wear, insurance, and depreciation.