The Privatization of Roads and Highways - Ludwig von Mises Institute

Congestion and Road Pricing 93
The difficulty with elasticity measurements, of course, is that
they are not constants which exist in nature, equivalent, for
example, to the fixed coefficient of gravity. On the contrary, they
are highly dubious attempts to measure the response of one
group of people, in one city, on one day, to an elimination of fares.
If the experiment were carried on in a different city, or for different
people, or on a different day, or at a different time of the day,
while holding all other conditions constant, the results would be
different. Elasticity, then, is a very weak foundation indeed upon
which to erect any public policy. Nevertheless, this criticism
seems to have effectively demoted free transportation as a highway
congestion cleanser to a secondary role. Instead, upgrading
the quality of mass transit has been urged in its place. 72
Furthermore, although collection costs would be virtually
eliminated, these costs themselves only amount to 8 percent of
total operating expenses. 73
Free-fares, moreover, are a denial of the price system. If there
is no payment for riding, there can be said to be no price system
in operation. Free fares, then, are undesirable in that they make it
impossible to retain the usual benefits associated with prices.
With free fares, there will be “no rational method of determining
the proportion of national resources that should be spent,” 74
since it is through the price system that such allocations are
made. Without fares, such allocation decisions will have to be
arbitrary.
by auto.” See Gerald Kraft and Thomas A. Domencich, “Free Transit,” presented
at the Transportation and Poverty Conference. Brookline, Mass.:
American Academy of Arts and Sciences, 1968. Cited in Lewis M. Schneider,
“The Fallacy of Free Transportation,” Harvard Business Review 47 (January–February
1969): 84.
72See Smerk, Urban Transportation, p. 231.
73See Vickrey, “The Revision of the Rapid Transit Fare Structure in the
City of New York.”
74See Roth, Paying for Roads, p. 18, for this and other criticisms of
unpriced road use.