Developing a General Approach to Toll Road Privatization

Earlier in this report, we suggested a series of criteria that could be applied to privatization proposals to deter-mine whether they have the potential to deliver benefits for the public. To recap, privatization may make sense when:

•  Private companies have a proven comparative advantage over government agencies in providing a particular good or service.

•  The services that are privatized are well defined, with clear criteria for the evaluation of success or failure.

•  Private contractors' performance is disciplined by ongoing competition, with multiple contractors capable of submitting bids and contracts of short enough duration to allow for unsatisfactory performers to be readily replaced.

•  Government officials making the decision to privatize can be held accountable for the results of a deal.

When evaluating toll road privatization according to these criteria, it is necessary to look separately at the two types of privatization arrangements discussed in this report: the leasing of existing roads and the private construction of new roads.