Last Updated:
25 May 2022

A New Approach to Private Roads

Using an innovative method for awarding franchise rights, states can entice more effective private investment in highways Author: Eduardo Engel, Ronald Fishcer, and Alexander Galetovic

During most of the twentieth century, highways, tunnels, and bridges were viewed as public goods that government must provide. By the end of the century, however, chronic budgetary problems had led governments to allow some participation of private firms in financing, building, and operating infrastructure projects. For example, worldwide private investment in transport infrastructure went from almost nothing before 1990 to $10 billion in 1990-91 and almost $30 billion in 1997-98. Massive projects like the Second Severn Bridge in Great Britain, the Guangzhou-Shenzen highway in China, or the 1,000 miles of upgraded Panamerican Highway in Chile have been financed and are being operated by private firms. Even in the United States, cash-strapped Orange County, Calif., resorted to private funding and operation when it was unable to provide for needed expansion of the Riverside Freeway in the early 1990s.