The Privatization of Roads and Highways - Ludwig von Mises Institute

Public Goods and Externalities: The Case of Roads 109
a whole this is an unsatisfactory state of affairs, for the individual
road user when making his decision does not—indeed he
cannot—take into account the costs imposed by him on others.
He assesses his private costs but ignores the road use, congestions
and community costs. It follows that so long as the volume
of traffic in conditions of congestion is determined by each
road user considering only his own costs and benefits, traffic
volumes will be larger, and costs higher, than is socially desirable.
14
And A.A. Walters expresses it this way:
Under congested conditions an additional vehicle journey will
add to the congestion. The vehicle will get in the way of other
vehicles using the road and will cause their costs to increase as
they waste more time in traffic jams and incur higher maintenance
costs per mile in the dense traffic. Thus the decision by a
vehicle owner to use a congested highway involves all other
users in increased operating costs. 15
Unquestionably, under present conditions motorists do
indeed ignore the costs they impose on other drivers with respect
to overcrowding. Frequently a driver takes account of congestion
costs imposed on him by others in that he tries to avoid being
ensnared in tie-ups if possible. But to suggest that a commuter
would refrain from traveling out of fear of slowing down others
14Roth, Paying for Roads, p. 34. Haveman, The Economics of the Public Sector,
p. 34, writes the following:
when the next semi-truck pulls onto the freeway with the effect
of delaying your arrival and that of all other freeway motorists,
you and your fellow drivers are the objects of a spill over cost. It
is characteristic that . . . the person harmed bears identifiable
“costs” for which he is not compensated. Moreover, . . . this person
would be willing to pay something to avoid bearing the spill
over cost.
15A.A. Walters, “The Theory and Measurement of Private and Social
Cost of Highway Congestion,” Econometrica (October 1968): 11.