Private highway

A private highway is a highway owned and operated for profit by private industry. Private highways are common in Asia and Europe; in addition, a few have been built in the United States on an experimental basis. Typically, private highways are built by companies that charge tolls for a period while the debt is retired, after which the highway is turned over to government control. This allows governments to fulfill immediate transportation needs despite their own budget constraints, while still retaining public ownership of the roads in the long term.

An obstacle to private highways is that government regulation can stifle price flexibility and introduce negotiation and paperwork requirements that increase operational expenses, while having to compete against free public roads. In addition, private highways lack some advantages that governments have, such as sovereign immunity against liability for accidents, the use of eminent domain power to acquire private property for roads and the ability to issue tax-exempt securities.

Free-market roads are advocated by libertarians, who consider them more efficient, safer, and more cost-effective than public roads.

The Interstate Highway System provided for in the Federal Aid Highway Act was a federally funded, non-toll system. According to Simon Hakim and Edwin Blackstone, "by 1989, [private] roads comprised just 4,657 miles (7,495 km) of the 3.8 million miles of streets and roads in the United States and only 2,695 miles (4,337 km) out of the 44,759 miles (72,033 km) of the interstate system."

The National Center for Policy Analysis and the Cato Institute have proposed that the Demsetz auctions commonly used to award franchises be replaced with Present Value of Revenues auctions in order to reduce risk and thus required rates of return by private highway owners. Under this system, contractors would bid an amount equal to the present value of cash flows from user fees they are willing to accept for the project. The lowest bid would win.

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