The Privatization of Roads and Highways - Ludwig von Mises Institute

Free-Market Transportation: Denationalizing the Roads 41
go awry. From the vantage point of history, an investment may
very often be judged unwise, wasteful and needlessly duplicative.
But this hardly constitutes a valid argument against private
roads! For the point is that all investors are liable to error. Unless
it is contended that government enterprise is somehow less likely
to commit error than entrepreneurs who have been continuously
tested by the market process of profit and loss, the argument
makes little sense. (There are few, indeed, who would be so bold
as to make the claim that the government bureaucrat is a better
entrepreneur than the private businessman.)
Very often criticism of the market, such as the charge of
wasteful duplication on the part of road owners, stems from a
preoccupation with the perfectly competitive model. Looking at
the world from this vantage point can be extremely disappointing.
The model posits full and perfect information, and in a
world of perfect knowledge there of course can be no such thing
as wasteful duplication. Ex post decisions would be as successful
as those ex ante. By comparison, in this respect, the real world
comes off a distant second best. It is perhaps understandable that
a person viewing the real world through perfectly competitivetinged
sunglasses should experience a profound unhappiness
with actual investments that turn out to be unwise, or needlessly
duplicative.
Such disappointment, however, is not a valid objection to the
road market. What must be rejected is not the sometimes mistaken
investment of a private road firm, but rather the perfectly
competitive model which has no room in it for human error.
An intermediate position on the possibility of road competition
is taken by Gabriel Roth. He states:
while it is possible to envisage competition in the provision of
roads connecting points at great distances apart—as occurred
on the railways in the early days—it is not possible to envisage
competition in the provision of access roads in towns and villages,
for most places are served by one road only. A highway
authority is in practice in a monopoly position. If any of its
roads were to make large profits, we could not expect other