Managing traffic by privatization of road capacity: A property rights approach

Road congestion remains a serious problem, despite all the efforts to limit road use and to manage growing road traffic volumes. Economic approaches (such as pricing) are introduced based on traditional welfare economic theory. Although they are sometimes very successful, the magnitude of traffic issues also requires alternative and unconventional approaches. Perhaps a more innovative perspective is needed. The paper discusses an alternative economic approach starting from property rights theory. It is translated in transport systems in concepts of infrastructure capacity slot management, where slots are dynamically priced and exclusively allocated to individual users. Debates and practices regarding this approach in air traffic and rail traffic are further developed than in the field of road traffic. The paper aims to explore the potential benefits and disadvantages of the property rights approach for road traffic. Attention is paid to major institutional and technical conditions. The conclusion is that the approach theoretically has clear advantages and seems technologically feasible. Nevertheless, serious political and institutional issues have to be solved first.