THE FULL COST OF INTERCITY HIGHWAY TRANSPORTATION

In this paper we review the theoretical and empirical literature on th e cost structure of the provision of intercity highway transportation and specify and estimate our own cost functions. We develop a full cos t model which identifies the key cost components and then estimate cos ts component by component: user costs, infrastructure costs, time and congestion costs, noise costs, accident costs, and pollution costs. Th e total long run average cost is $0.34 per vehicle km traveled. The si ngle largest cost category is freeflow travel time. While the marginal cost of infrastructure is higher than its average cost, indicating th at new construction is increasingly expensive, the marginal cost of dr iving (user fixed and variable costs) is less than the average cost, i ndicating that by increasing travel the user can spread his fixed cost of a vehicle over more trips without penalty. (C) 1998 Elsevier Scien ce Ltd. All rights reserved.