Private Provision of Local Rural Roads Cathy A
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Iowa State University Capstones, Theses and Retrospective Theses and Dissertations Dissertations 1987 Private provision of local rural roads Cathy A. Hamlett Iowa State University Follow this and additional works at: https://lib.dr.iastate.edu/rtd Part of the Agricultural and Resource Economics Commons, and the Agricultural Economics Commons Recommended Citation Hamlett, Cathy A., "Private provision of local rural roads " (1987). Retrospective Theses and Dissertations. 8542. https://lib.dr.iastate.edu/rtd/8542 This Dissertation is brought to you for free and open access by the Iowa State University Capstones, Theses and Dissertations at Iowa State University Digital Repository. It has been accepted for inclusion in Retrospective Theses and Dissertations by an authorized administrator of Iowa State University Digital Repository. For more information, please contact [email protected]. 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For the Graduate College Iowa State University Ames, Iowa 1987 ii TABLE OF CONTENTS ACKNOWLEDGMENTS iv CHAPTER I. INTRODUCTION 1 Background on the Rural Road and Bridge Problem ... 1 Problem Statement and Objectives 5 CHAPTER II. LITERATURE REVIEW 9 Private Provision Literature 10 Rural Road Reduction Literature . 16 Politics, Policies, and Public Good Literature ... 18 CHAPTER III. WELFARE IMPLICATIONS 26 Model for Private Provision of Roads 30 Nash-Cournot Solution 39 Nash-Cournot Comparative Static Analysis 45 Pareto-optimal Solution 57 CHAPTER IV. BENEFIT-COST ANALYSIS 66 Specific Form of Benefit-Cost Ratios 70 Empirical Estimation of the Benefits 72 Empirical Estimation of the Costs 78 ill Two Estimated Benefit-Cost Ratios 83 CHAPTER V, POLICY ISSUES AND RELATED TOPICS 90 Political Background and Processes - 90 More on the Rural Residents 93 Policy Analysis 95 Example of Incentive for Boosterism 96 CHAPTER VI. SUMMARY AND CONCLUSIONS 102 Future Research Ideas 108 BIBLIOGRAPHY Ill APPENDIX 116 iv ACKNOWLEDGMENTS My research and graduate education have occurred in an atmosphere of support and encouragement. I have many people to thank. In order of appearance, Jim comes first. He has been my friend and support for such a long time. Hours upon hours we have spent discussing graduate school and its impact on our lives. Always in the darkest moments he is there and in the happiest moments, Jim is there too. No words can express the depth of gratitude, caring, and loyalty I feel toward this human who shares his life and name with me. C. Phillip Baumel, my major professor, advisor, and friend is next. Phil has given me much useful advice and encouragement over the years. He allowed me the freedom to learn and to make mistakes (which are also part of learning). I realize that there are many times when I should of said thank you and that there is no way to make up now. Even though the appreciation may be too little, too late--thanks Phil. Thanks for all the times when I said, "Phil do you have a minute?" and you said, "Sure." even though you really did not. Though I have known Todd Sandler for less than a year, he has had an enormous impact on ray research and education. V A man of extraordinary intelligence and energy, he willingly gave my research effort hours at the expense of his own research--time reviewing the dissertation, discussing research approaches, and participating in my final oral. His depth of concern for students both inside and outside the classroom is genuine and refreshing. Todd has, through his teaching, at least doubled my understanding of economic theory. The theory chapter of this dissertation has definite imprints from Todd's own research which he so willingly shared with me, I do however accept the sole responsibility for whatever errors may occur in the work. Next I would like to thank the remaining members of ray committee--Arne Hallam, Neil Harl, Roy Hickman, and Charlie Meyer. They gave me excellent advice in both my prelim and final oral. They also spent time reading this dissertation which I realize is a sacrifice for people such as Arne, Neil, Roy, and Charlie, who are very busy. They pointed out many useful corrections and additions. Roy Hickman along with Toni Genalo deserve an extra thanks for the help given in the data collection for the benefit-cost analysis. The Iowa State Statistical Lab, which Roy and Toni embody, made a difficult data - collection process bearable. A special thanks to Greg Pautsch who has been part of the empirical research from the beginning. The hours we spent discussing and worrying surely contributed to the quality of the final product of the research, if not that, then at least our own mental health. Several people have contributed to the empirical analysis over the years of data collection and benefit-cost estimation. I would like to especially recognize Sherry Brennan Miller, Shawn Dunn Ferris, Steve Hansen, and Kent Hansen. Shawn and Sherry have had a much more dramatic impact on my graduate career than just helping with the road and bridge project. They have been friends and running partners who kept my spirits up and my mile-time down. We have experienced much together and I owe them both more than 1 can ever express or repay. Thanks for understanding my eccentricities, for the emotional support, and for the countless other gifts you two have given me. Last I would like to acknowledge D. F. Cox who I have known since my days as an undergraduate. Besides being the best teacher I have ever experienced, he is a friend. A man of wisdom and kindness, D.F., has known what to say to help me get through trying times like prelims, theory courses, and job interviews. Thanks Dave. 1 CHAPTER I. INTRODUCTION Background on the Rural Road and Bridge Problem The rural road system in the United States is massive. The rural system, for this research, is defined as those roads maintained and controlled by counties or townships. Over 2.2 million miles of roads are contained in this system and much (particularly in the midwest) is built on a grid with parallel roads being one mile apart. The Ordinance of 1785 was a major reason for this pattern as it established townships and the one-mile survey grid which divided the land into 640 acre sections or an area of one mile square. As land was parceled and sold, the sections were further broken into tracts of land, generally no smaller than 40 acres. Then, as roads were being surveyed and constructed, the section lines or boundaries between tracts became the logical places for the roads which lead to the grid pattern of roads found throughout the midwest. With a road on each side of the section, access to tracts was guaranteed and many times access was available from at least two directions. 2 Many of today's local rural roads and bridges were built in the late 1800s and early 1900s when overland transportation for both passengers and freight was limited to horse and wagon or the recently built railroad lines.