THE PAPER EXAMINES THE BELIEF THAT THE PROVISION OF ROAD CAPACITY IS SUBJECT TO PRONOUNCED TECHNICAL INDIVISIBILITIES. THE FIRST PART OF THE PAPER PROVIDES A BRIEF THEORETICAL TREATMENT OF ROAD INDIVISIBILITIES, ILLUSTRATING THEIR SIGNIFICANCE. THE TREATMENT IS DIFFERENT FROM PREVIOUS ACCOUNTS BY FIRST REDEFINING THE PRODUCTION FUNCTION FOR ROAD SERVICES. IT IS SHOWN THAT THE PRESENCE OF INDIVISIBILITIES IS A NECESSARY BUT NOT SUFFICIENT REASON FOR EFFICIENT ROAD USER CHARGES TO DIVERGE FROM LONG-RUN MARGINAL COSTS. IN ORDER TO FOCUS ON THE INDIVISIBILITY ISSUE, IT IS SUGGESTED THAT THERE ARE NO BARRIERS TO AN EFFICIENT SYSTEM OF USER CHARGES. IT IS RECOGNISED THAT THERE ARE DIFFICULTIES IN IMPLEMENTING SUCH A SYSTEM APART FROM POLITICAL ACCEPTABILITY. THE SECOND PART OF THE PAPER PRESENTS AN ANALYSIS OF THE EXTENT TO WHICH INDIVISIBILITIES OCCUR IN PRACTICE. THE DATA USED FOR THIS PURPOSE RELATES TO RURAL MAIN ROADS IN AUSTRALIA.
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