The paper provides a theoretical framework for analysing the effects of public infrastructure provision on private sector productivity using the example of a transport network. Public infrastructure such as a transport network is assumed to be a (congested) public good. When the provision of this good is at the long run equilibrium level, consumers pay a price which reflects the (individually-determined) marginal productivity of the good and the supplier is also recovering all its opportunity costs. This paper explores an alternative definition of infrastructure 'capacity' and 'congestion' level where it is related more to the level of traffic density and travel speed, rather than to traffic flow. Defining capacity and congestion in this way, the paper opens the way for redefining the concept of an optimal 'congestion tax' or traffic toll which can be used to apply to the case of heavily congested or bottleneck situation as well as to the traditional case of 'low congestion'. The paper illustrates this new concept of congestion toll with an empirical estimation to an actual road network. (Author/publisher) For the covering entry of this conference, please see ITRD abstract no. E209537. This paper may also be accessed by Internet users at: http://www.btre.gov.au/docs/atrf_02/program.html
Abstract