The Privatization of Roads and Highways - Ludwig von Mises Institute

Road Privatization: Rejoinder to Mohring 371
As figure 1 suggests, the direct effect of congestion on tolls
would have made the average road user worse off. Almost all
would have paid more for the trips they continued to take and
would no longer have taken some trips that formerly yielded
net benefits. While all travelers would have benefited from
faster trips, toll payments would have exceeded the value of
these time savings for most. Only two small groups would have
reaped net benefits from congestion pricing regardless of the
uses to which revenues were put. There were then-current
mass-transit users and very high-income auto travelers. Tolling
would have induced some travelers to divert from auto to bus.
. . . On the most congested roads, for auto users with incomes
greater than about $80,000 a year, travel-time savings would
have exceeded their toll costs. On less congested roads, only
travelers with incomes well into the six-figure range would
have had net benefits. 34
The clear implication of this is that it would be unwise, inefficient,
and counterproductive to charge a price for road use. 35 But
let us take a moment for common sense to prevail. If private owners
would, on this account, be legally prohibited from charging a
price for use of their property, this would just about spell the
death knell for any privatization efforts. For all practical purposes,
we would be stuck with present institutional arrangements,
which, in addition to featuring bumper-to-bumper traffic,
also constitute carnage for motorists. Another difficulty with
Mohring’s analytic framework is that it “proves” far too much. If
it is improper for street and highway owners to charge prices, and
if department stores 36 resemble roadways in terms of congestion
34 Mohring, “Congested Roads,“ p. 154.
35If this were really true, private enterprise would give away these services
for free, as loss leaders or as part of a larger package, in much the same
way as Disneyland gives “free” use of its thoroughfares to pedestrians, as
malls do the same for shoppers in its internal streets, and indeed, for its
outer streets and often, parking spaces.
36Other businesses earmarked by great cyclicality include movie theaters,
restaurants, football (Super Bowls), baseball (the World Series),
hotels, air transport, cruise ships, etc.