Financing Road Capacity and Returns to Scale Under Marginal Cost Pricing: A Note

Key Points

• The central aim is to clarify how scale economies influence the relationship between toll revenue and capacity costs at marginal cost pricing.
• Investigated the relationship between toll revenue and capacity costs.
• Analyzed how scale economies are measured.
• Examined the implications of fixed factor prices on measurement.
• Concluded that keeping factor prices fixed is vital for accurately measuring scale economies.
• Identified the disagreement on measurement approaches among scholars.