A DUAL ECONOMIC-ANALYSIS OF THE BENEFITS OF THE PUBLIC ROAD NETWORK

The productivity impact of public infrastructure is assessed by applying duality theory and estimating the savings in private production costs associated with the provision of public capital. The method used is that of a generalized cost function incorporating both physical and monetary measures of the provision of public road infrastructure capital as fixed unpaid factors of production. Estimation is done using a panel data set of 31 German manufacturing industries in the FRG. The resulting estimates form the basis of a motorway toll system using the principle of ''pay-as-you-benefit''.