Impacts of Alternative Toll-Fee Structures on Highway Use

Challenges against the toll-fee system in South Korea emphasize the need for research that informs decisions regarding the conversion of toll-fee to toll-free highways. A cost-benefit analysis of reduced toll fees is performed based on a highway usage model. The model predicted traffic linked to South Korea’s Kyungbu Highway would increase by as much as 42 % if the toll fee were removed. Increased highway usage, induced by removing distance-related toll fees, is estimated to increase consumer welfare by $76 million. The increased traffic also produces negative extenalities estimated to cost $155 million, resulting in net losses of $79 million. The estimated net losses provide a critical public-welfare perspective for answering the question about whether to lower the toll fee on the Kyungbu Highway in South Korea.