Sharing costs in Swedish road ownership associations

Abstract

Usually transport systems, and roads in particular, are viewed as public goods. However, this is not always the case. In Sweden a large part of the road system is privately owned. Most of these privately owned roads are rural roads used by farmers and summer cottage owners, or used for forest transport. These roads are mainly provided by ownership associations.An important difference between public roads and these privately owned roads is that all investments- and maintenance decisions are made by the users themselves, who also have to pay the costs, whereas the usual case is that the owners/providers of a road-system are different agents than the users. Here the question is not how to charge the roads but how to split the costs of the roads among the users in an efficient and “fair” way.The motivation of this paper is the practical problem of how such an ownership association can divide the costs for the road network among the members in an efficient and “fair” way. The problem is treated from a game theoretical point of view, making use of the Shapley value. This means that the problem is associated with a game – a mathematical representation of the conflict situation. The Shapley value is a very important solution concept for cooperative games, like the game in this case. For games corresponding to this specific type of problems, it is shown that the Shapley value has excellent properties, such as beeing an element of the core, and beeing very easy to compute.