Scandinavian Working Papers in Economics

Working Papers,
Swedish National Road & Transport Research Institute (VTI)

No 2007:7: Marginal costs for road maintenance and operation - a cost function approach

Mattias Haraldsson ()
Additional contact information
Mattias Haraldsson: VTI, Postal: Dept. of Transport Economics, P.O. Box 55685, SE-102 15 Stockholm, Sweden

Abstract: Using observational data covering the whole Swedish national road network for the period 1998-2002, this paper estimates a set of maintenance and operation cost functions. It is found that costs for all operation and maintenance measures increase with traffic intensity, with two exceptions; total operation and winter operation measures are fixed cost activities. All other operation and maintenance measures have short run elasticities in the range 0.25-0.60. The impact of an additional vehicle is generally manifested in extra maintenance and operation costs, not only while the vehicle is using the road, but later on as well. Point estimates of long run cost elasticities are higher than one in general.

Keywords: Transport economics; marginal cost; road maintenance; road operation

JEL-codes: R40

28 pages, September 3, 2007

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