Local Rural Road Costs and Economies of Scale

Because of the growing concern over the operational efficiency of local rural road administrative units, a representative sample of 147 township road units in the State of Illinois was analyzed to establish the presence of any economies of scale. A factor analysis of 48 cost-related variables provided a fundamental understanding of those elements which influence local road costs. By means of statistical modeling techniques, it was shown that annual costs per mile are directly related to the level of land access provided by the local road network, and inversely related to the total road mileage administered. The potential economies of scale which can be achieved by consolidating local rural road units was then illustrated for a hypothetical situation.