The Privatization of Roads and Highways - Ludwig von Mises Institute

28 The Privatization of Roads and Highways
traffic, the presumption is that the owner of the intersection
would act so as to minimize the chances of motorists from either
street being isolated in the intersection as the traffic light
changed.
This analysis of the ownership situation concerning cross
streets and their intersections will enable us to answer several
other possibly perplexing problems.
5. How would Green Light Time be Parceled Out under Free Enterprise?
Of course, most street owners, if they had their choice, would
prefer the green light for their street 100 percent of the time. Yet,
this would be tantamount to a limited access highway. If it is to
be a city street, a road must content itself with less. What proportion
of red and green lights shall be allotted to each street?
If all the streets in one neighborhood are owned by one company,
then it decides this question, presumably with the intention
of maximizing its profits. Again, and for the same reasons, we
can expect a more effective job from such a “private” owner, than
from a city government apparatus.
In the case of intersection ownership by a third party, the two
cross street owners will bid for the green-light time. Ceteris
paribus, the presumption is that the owner of the street with the
larger volume of street traffic will succeed in bidding for more of
the green-light time. If the owner of the larger volume street
refused to bid for a high proportion of green-light time, his customers
would tend to patronize competitors—who could offer
more green lights, and hence a faster trip.
A similar result would take place with two street owners, no
matter what the property dispersal. 18 It is easy to see this if the
larger street company owns the intersections. The larger company
would simply keep a high proportion (2/3, 3/4, or perhaps
18 We assume away here the presence of psychic income phenomena. See
Walter Block “Coase and Demsetz on Private Property Rights,” Journal of
Libertarian Studies 1, no. 2 (Spring, 1977): 111–15.