So ask the stores / developers / employers along the route to buy-in on the road. Ask them to help pay for construction and give them a cut of the tolls proportionate to their investment. This lowers external capital requirements to create new roads. Tolls could be used primarily for maintenance and upgrades, but may have some profit associated to pay back the initial investment. If the associated nearby economic interests are invested in the road, incentives seem pretty well aligned to me. Thoughts?
Why should the stores along the route buy-in? They'll get the benefit of the route for free even if they don't buy-in.
As for giving the stores a portion of the tolls, that doesn't help, because you're still trying to recover all the costs of construction from a subset of the people who benefit from the road. Think about the math: say drivers benefit X from the road and stores and developers and employers benefit Y. Total social benefit is X + Y. With tolls, your incentive to build roads is F(X), insensitive to Y. So whether Y = 10x or 0.5X doesn't change your incentive to build the roads at all. In other words, the incentives aren't aligned with the social benefits.
Comments
So ask the stores / developers / employers along the route to buy-in on the road. Ask them to help pay for construction and give them a cut of the tolls proportionate to their investment. This lowers external capital requirements to create new roads. Tolls could be used primarily for maintenance and upgrades, but may have some profit associated to pay back the initial investment. If the associated nearby economic interests are invested in the road, incentives seem pretty well aligned to me. Thoughts?
Why should the stores along the route buy-in? They'll get the benefit of the route for free even if they don't buy-in.
As for giving the stores a portion of the tolls, that doesn't help, because you're still trying to recover all the costs of construction from a subset of the people who benefit from the road. Think about the math: say drivers benefit X from the road and stores and developers and employers benefit Y. Total social benefit is X + Y. With tolls, your incentive to build roads is F(X), insensitive to Y. So whether Y = 10x or 0.5X doesn't change your incentive to build the roads at all. In other words, the incentives aren't aligned with the social benefits.