Many Americans are annoyed by the state of Roads in the country. Many roads are narrow and have few lanes that lead to traffic congestion. Traffic congestion is not appropriate for the economy because the economy loses much income for the time that employees spent on the road instead of working. The solution to the traffic congestion that results from narrow roads is to widen the roads by increasing lanes on roads. Additionally, the widening of roads can be privatized so that road users can pay a toll fee.
According to Samwel (1995), most highways in the U.S have been financed by taxes earned from gas. The taxes are now transferred to the general revenue of the government. The amount of money that is left for roads is used to maintain the roads and not the construction of new roads. Due to the increasing taxes, the solution to widening the roads is left to the private sector so that they can increase the roads in the country. Maurice & Thomas (2008) argue that the roadways should be privatized and markets established in highway service. The privatization of roads should be sold by sections to allow the private owners to maintain the road. Through highway privatization, government taxes and other charges could be avoided. Toll charges by private highway road owners could vary depending on the owners.
According to Poole (2009), privatization of highways could bring with it increased capacity and savings on costs for road users. The provision of general-purpose lanes will permit a higher flow of vehicles per hour compared to when the lanes are not there. Increased lanes on roadways will reduce traffic congestion due to increased capacity. Cost concerns for general-purpose lanes will address a subset of vehicles. Proposed vehicles for general-purpose lanes are carpools, buses, and trucks. According to Poole (2009), the rationale for the privatization of highways and the introduction of toll fees on roads is increased productivity. Highways for trucks will permit higher axle loads hence increasing productivity. Given the current status where trucks use roads, not of their designation, the damage is high. Special truck ways with toll charges will reduce road maintenance costs.
The management of any organization is interested in cost minimization and profit maximization. Therefore, optimal decisions are necessary for the effective performance of the organization. Making an optimal decision concerning road privatization and the introduction of toll charges will be based on the cost and production functions. Studies that have utilized short-run production and cost functions have established that privatization and the introduction of toll charges on roads are economically important (Maurice & Thomas, 2008). Cost evaluations indicate that construction of new lanes and expansion of the roadways is productivity in the economy and therefore the cost function will have to be applied in determining the most cost-efficient costs for the road construction.
Private constructors that are interested in increasing general-purpose lanes will only begin construction if the cost to be incurred in the construction is equal to or higher than the marginal benefits of the lanes. An optimal decision can also be made using the profit maximization function. The management can utilize regression analysis models and results to arrive at optimal decisions on road construction. Given the fact that productivity will increase, maintenance costs will be saved and employees’ time will be saved, the companies will construct more lanes on highways.
References
Maurice, S. & Thomas, C. (2008). Managerial Economics. 9th Ed. New York, NY: McGraw-Hill.
Poole, R. (2009). When Should We Provide Separate Auto and Truck Roadways? JTRC, Discussion paper No. 2009. Web.
Samwel, P. (1995). Highway Aggravation: The Case for Privatizing the Highways. Web.