ABSTRACT
In this article I construct a hypothetical situation to reveal some of the circumstances under which consumers’ surplus, when used as an index of the benefits to be derived from private automobile travel, may give perverse results - a rise in the index being accompanied by a reduction in the benefit experienced by motorists. Less surprisingly, it will also be shown that the use of consumers’ surplus in determining optimal traffic flows, in benefit-cost studies, and in estimating rates of return in road investment results in solutions leading to overinvestment in road construction unless the alternatives to private automobile travel are properly priced.
