The Privatization of Roads and Highways - Ludwig von Mises Institute

358 The Privatization of Roads and Highways
with an unencumbered view of the screen diminishes. And, of
course, in driving on urban roads, more congestion means
more time consuming and, for most, less pleasant trips. 6
However, despite what this author can only see as superficial
resemblances, roads are very different for him than practically all
other products; in his view, the latter can be provided by the private
market place for a profit, while the former cannot. One reason
for this is the following:
Neither widget buyers nor widget 7 sellers ever see the backward-bending
part of the AVC curve . . . because the difference
between SRMC and AVC 8 is built into the price they pay. Not so
for road users: in deciding whether and when to make trips,
most travelers take into account the costs congestion imposes
on them. Few worry about the costs their trips impose on others
by slowing them down. The unrecognized external cost or
“externality” of travel some times forces road users into the backwardbending
part of AVC. 9
MARKET FAILURE
This is par for the course for traditional neoclassical economic
analysis, according to which there are all sorts of “market failures”
out there, and “externalities” are one such. In contrast, from
the Austrian economic perspective 10 from which the present
6Ibid., p. 143.
7This is Mohring’s word for pretty much all goods other than road services.
8These curves are depicted in Mohring’s figure 1, which is marred by the
fact that the AVC and the SRMC do not cross at the bottom point of the former.
9Mohring, “Congested Roads,“ p. 145.
10Murray N. Rothbard, “The Present State of Austrian Economics,”
Working Paper from the Ludwig von Mises Institute (November).
Reprinted in The Logic of Action One: Method, Money, and the Austrian School