Title

Assessing the Impact of Monopoly Toll Road Service Areas

Department/School

Finance

Date of this version

2004

Document Type

Article

Abstract

The higher prices on the Garden State Parkway, the Atlantic City Expressway, and the New Jersey Turnpike found in this study demonstrate that consumers face increased prices when there is a government-created monopoly for service providers at rest areas instead of vigorous competition. Prices for gasoline are higher at service areas along the Garden State Parkway and the Atlantic City Expressway. Food prices are dramatically higher at service areas along the Garden State Parkway, the Atlantic City Expressway, and the New Jersey Turnpike. Consumers are clearly worse off when they are paying these marked-up food and gasoline prices on New Jersey's toll roads. As this research has demonstrated, consumer welfare along the GSP and NJT is annually reduced by $5,475,027 because of higher gasoline prices and $26,227,925 because of higher food prices. While these findings focus on the price and quantities of goods sold at monopoly service areas, economic theory also suggests that the quality of customer service may be reduced when competition is absent.

Published in

Eastern Economic Journal

Citation/Other Information

30 (3)