Comments Welcome The Full Cost of Intercity Highway Transportation 2.pdf

The Full Cost of Intercity Highway Transportation 2 The Full Cost of Intercity Highway Transportation by David M. Levinson and David Gillen, Institute of Transportation Studies University of California at Berkeley McLaughlin Hall, Rm. 109 Berkeley, CA 94720 Draft: November 5, 1997 Contact: David M. Levinson 1822 Francisco St. #11 Berkeley, CA 94703 dmlevins@uclink2.berkeley.edu (510) 848-3057 Comments Welcome Levinson and Gillen 12/4/97 The Full Cost of Intercity Highway Transportation 1 1. Introduction There has been a great deal of recent interest in identifying and measuring the full costs of transportation, particularly highways (see for instance: Keeler et al. 1974, Fuller et al. 1983, Quinet 1990, Mackenzie et al. 1992, INRETS 1993, Miller and Moffet 1993, IWW/INFRAS 1995, IBI 1995, Levinson et al. 1996, Delucchi 1996). This debate questions whether various modes of transportation are implicitly subsidized and to what extent this biases investment and usage decisions. While environmental impacts are used to stop new infrastructure, the full costs to society of transportation are not generally calculated for financing projects or charging for their use. In this paper we review the theoretical and empirical literature on the cost structure of the provision of intercity highway transportation and specify and estimate our own cost functions . In defining this framework we distinguish between internal (private) and external (social) costs, long and short run costs, and average and marginal costs. We also explore the various scale and scope economies that arise in the provision of transportation services. In general, highway segments produce two outputs: traffic flow which requires capacity in terms of the number of lanes, and standard axle loadings which require durability in terms of the thickness of the pavement. As early as 1962, Mohring and Harwitz demonstrated that the financial viability of an infrastructure facility, under optimal pricing and investme