The Privatization of Roads and Highways - Ludwig von Mises Institute

12 The Privatization of Roads and Highways
Unfortunately, even those economists who, like Roth, call
explicitly for a consideration of the similarities between roads
and other goods are unwilling to carry the analogy through to its
logical conclusion: free-enterprise highways and streets. Instead,
they limit themselves to advocacy of road pricing, but to be
administered, always, by governmental authorities.
What reasons are there for advocating the free-market
approach for the highway industry? First and foremost is the fact
that the present government ownership and management has
failed. The death toll, the suffocation during urban rush hours,
and the poor state of repair of the highway stock are all eloquent
testimony to the lack of success which has marked the reign of
government control. Second, and perhaps even more important,
is a reason for this state of affairs. It is by no means an accident
that government operation has proven to be a debacle and that
private enterprise can succeed where government has failed.
It is not only that government has been staffed with incompetents.
The roads authorities are staffed, sometimes, with able
management. Nor can it be denied that at least some who have
achieved high rank in the world of private business have been
incompetent. The advantage enjoyed by the market is the automatic
reward and penalty system imposed by profits and losses.
When customers are pleased, they continue patronizing those
merchants who have served them well. These businesses are thus
Many of the characteristics that are held to make transportation
“different” are in fact found in other industries as well, and . . .
the same forms of analysis that are applicable in other industries
can be utilized as well for transportation. Thus complementarity,
or joint production, as between forward and back hauls, has its
counterpart in the joint production of hides and meat from the
same animal. Perishability is greater than from fresh produce,
but less, in many cases, than for a newspaper. Congestion occurs
in supermarkets, and externalities or “neighborhood effects” are
pervasive. Customer time cost is involved in getting a haircut.
(William Vickrey, “Review of Herbert Mohring, Transportation
Economics” [unpublished manuscript])