I have a question about privatizing the roads. I am all for it, however, when I was discussing the issue with my dad, he asked me what competition would exist under private roadways? You couldnt just put up another road right next to the existing road. Therefore, what would keep the owners from raising the price to use the roads. I am sure the answer is simple, but I am not very learned in this topic. Thanks.
In rural areas, the possibility of putting up one road next to another would almost always exist.
In urban areas, there are a few possibilities. Assuming that the present road system isn’t run by a single party that is bound by contract to charge a low rate (I think the most probable situation), if present roads are being run so poorly that there exists a large profit margin, it might be in someones interest to buy up existing properties or options and in fact build a road next to an existing one and start competing.
Asides from this, there is always the option of building tunnels underneath, assuming one does not meddle with the infrastructure of the other town.
I would think that in urban areas mass transit would provide the competition necessary to keep prices down.
The answer is that property owners would own their own roads or rent land from those who do, as has been the case since the dawn of road-building.
The other answer is that his definition of competition is invalid.
I understand that competition would exist, but how do you charge for private roads? If I choose not to pay for a private road, but decide to drive on it, the owner of the road would need a group to enforce ownership of the road. Is there a way to avoid having a type of security force monitoring the roads for people who haven’t paid to use them?
The property owners pay in order for their property to be connected to the road. There is no reason to toll roads unless demand is so high that traffic jams occur.
I like that solution!
I agree with what previous posters have said, but I’d like to add that in a society where private roads were the norm, it seems likely to me that roads will soon become obsolete. The automobile is an artifact from an archaic period that is being made permanent by state interference in the market.
All problems caused by supposedly “public” goods are resolved if large-scale property ownership and capitalist production is allowed. This means that someone has the right to supply the public goods on his estate in exchange for rents from tenant properties.
If this were the middle ages and I was landowner who wanted to benefit from the emerging continental trade, I would build a wall around a part of my land and rent the land within the walls to merchants. I would also have to provide streets, wells, policing of the public space, and so on. Providing these goods would mean the land on the inside would be more valuable than the land on the outside, and it would become a town.
Cars are a technology more than two thousand years old. The only thing that has changed is that they are now dragged along by a motor engine instead of a horse.
The internal combustion engine is a HORRIBLY inefficient way of producing motive power. If human ingenuity operating in a free market can’t produce a better engine once the considerable barrier of the state gets out of the way, then several key assumptions Austrians make about economics are wrong.
And we already know how to fly. Once we have that efficient engine, there’s no reason to assume that cars will be stuck on the ground forever. And once cars fly, roads begin the process of obsolescence.
Couldn’t the road owner charge an even lower price if he sold billboards along the road to advertisers?
So you are saying that if you did not pay to use the road, the road owner would disconnect your driveway from the road? I know I sound clueless here, sorry, but I am not sure what you mean.
It depends on the road. Urban roads will most likely be owned by groups of property owners, whereas rural roads will probably be provided by private firms. Another thing to note is that competition also takes place on the market for corporate control and with all other goods in the market. Competition is much more dynamic than what your father envisages.
The market determines the price that the property can earn, and if is saturated with annoying billboards it will be in lesser demand than clean, aesthetically-pleasing roads.
The use of the roads is part of a bundle of goods, which may include parks, garbage removal, water, electricity, and so on, provided by the property to the tenants. If the tenants do not hold up their end of the contract, they will be evicted.
Unfortunately the market cannot be more efficient than the laws of physics allow.
Helicopters have existed for 50 years. They didn’t take off. Even the rich don’t commute by helicopter. Only the ultra-rich do.
Thanks, that makes more sense. I have not read very much on the topic so I was stumped when he said that. I will have to enlighten him on the more dynamic aspects of competion, not just the surface appearance of it.
Just a small qualification; I’m referring to free markets, not the current regulated environment in which the market for corporate control no longer provides the incentive to remain competitive that it used to.
Umm… I actually rather like my internal combustion engine, and I’d rather like some more. I’d be pretty happy with a ford gt, even if I don’t get too fly everywhere by plane. So even if the free market won’t provide me some incredibly efficient flying machine, I’d be pretty happy with the good old internal combustion engine, although free markets could definitely improve our current tech.