Why not build toll roads to support fast development?

Ask an Economist
Question: 

Hello, I am a Clemson student in Biosystems Engineering of all subjects and I was working on a side project that had me consider how inefficient ubran development is. I suppose this has two parts: Why are there no private toll roads being constructed by the developers who are turning places like Greenville, Columbia and Charleston SC into parking lots? Is there a legal restriction on the use of toll roads considering South Carolina has two of the only private toll roads I know of?

A shorter way to ask this would be is if there is a true economic incentive to build roads when the government says that they will pay for it anyway.

Answer when you can. Thank you!

Answer: 

Private developers will identify profitable opportunities from constructing toll roads; the current road system may be too congested or outdated, or an undeveloped route may have potential to be lucrative. Typically, proposals made by individual (or consortium of) developers will have to be approved by the government, which will consider not only project's viability (e.g., funding, maintenance) but also market power (e.g., pricing rules, ownership duration) and externalities (e.g., pollution). Private construction and operation of highways may result in higher efficiency and encourage further innovation, but right safeguards will have to be implemented by the government. See https://www.fhwa.dot.gov/ipd/project_profiles/ for a list of highways involving private developers.  

Answered by:
Dr. Donghyuk Kim
Assistant Professor
Last updated on February 13, 2020