In Norway there has been a long-standing tradition in financing road infrastructure investments by road user tolls. The running and collection of tolls are managed by non-profit organisations whose main aim is to see road projects realised at an earlier stage than would be possible by the scarce government funding. The government is also looking for other ways of financing road maintenance and operation not covered by the current toll arrangements. As a consequence, the Norwegian government in the last five years has sanctioned a Build Operate Initiative (BOI). Currently there are five such projects where one is already in operation. The efficiency of the current toll system and the BOI approach were compared. It is shown that while under the current regime the private sector is only a subcontractor delivering pre-specified services in small scale, under BOI the private sector has full responsibility for delivering road services. Thus BOI entails competition among private contenders which in order to maximize profit offers an indirect incentive for cost-effective production of services, innovations and risk minimization as compared with a (public) monopoly. However, for BOI to function, there must be many agents in the market wishing to offer their services which is not always the case in Norway. For the covering abstract see ITRD E126595.
Abstract