It is commonly agreed that the relationship between toll revenue and capacity cost under marginal cost pricing depends on scale economies of the transport system. It is also agreed that, if the user travel cost depends on traffic density only, then what matters is the scale economies in road capacity production. What is disagreed is how to measure these scale economies. This note investigates this issue within a structural context and concludes that, in measuring the relevant scale economies, factor prices should be kept fixed. (Author/publisher).
Abstract