The effects of decentralized capacity decisions for congested self-financed roads

This paper studies the differences between centralized and decentralized decisions for capacity and road user charges on a congested self‐financed road with local, national and international traffic. Road user charges are allowed only to cover the costs for providing the road with a specific capacity, and to cover external costs caused by traffic. The road is either provided by the nation, or else this responsibility is decentralized to the community. The results of this paper show that it can matter significantly on what level such a decision is made. A decentralized decision leads to a total wellfare loss, and there is both a national and international interest for not decentralizing such decisions.