Working Paper: NBER ID: w30989
Authors: Matthew Turner; Neil Mehrotra; Juan Pablo Uribe
Abstract: We pose the problem of managing the interstate as an optimal capital stock problem and define user cost as the charge per vehicle mile travelled that rationalizes observed investments in lane miles and pavement quality. We find that user cost is the sum of the opportunity cost of lane miles, pavement quality, and depreciation. Each depends on the price of lane miles and pavement quality. We estimate these prices and evaluate user cost. Despite large increases in the price of lane miles and pavement quality, user cost declines almost 50% from 1992-2008 due to lower interest rates and higher usage. Increased materials costs largely explain the increasing price of pavement quality, and we reject several common hypotheses for the increase in the price of lane miles.
Keywords: infrastructure; user cost; interstate highway system; capital stock
JEL Codes: E22; R42; R53
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| user cost (D61) | opportunity cost of lane miles (R48) |
| opportunity cost of lane miles (R48) | user cost (D61) |
| interest rates (E43) | user cost (D61) |
| vehicle usage (L92) | user cost (D61) |
| prices of lane miles (R48) | user cost (D61) |
| pavement quality prices (P22) | user cost (D61) |
| cost of capital (G31) | user cost (D61) |