The Privatization of Roads and Highways - Ludwig von Mises Institute

Congestion and Road Pricing 69
states, and many regional, planning associations boast of well
entrenched, thorough and detailed laws which narrowly restrict
the pattern of land settlement. If these laws are already in operation
during the congestion crisis, how can the solution to this
problem lie in the direction of still more controls?
On the contrary, economic analysis points to the operation of
the market as an antidote to such location-caused congestion. If,
for example, housing is built on a massive scale in a place without
adequate transportation or the prospects of such, it is simply
not true, as implied by the Owen view, that hordes of people will
first move in, either as renters or purchasers, and then, starting to
worry about how they will travel to work, discover that they will
be very cramped and congested.
In a fully free market, with all travel modes privately owned,
things will in all likelihood work out very differently. Location
decisions will ultimately be approved or disapproved by the final
consumer, as are all entrepreneurial choices. But in this case, two
different sets of entrepreneurs will together be responsible for
launching projects: the builder and the transportation owner.
The builder, of course, determines the location of his edifices.
But he cannot plan in a vacuum. If there are not ample sources of
transport, either of the mass variety (trains, trolleys, buses, etc.)
or of the “private” kind (the automobile on an individually
owned road), he knows he will not be able to attract customers
on a profitable basis. Before building, then, he will either determine
that there are sufficient sources of travel access for his
potential customers, or that there soon will be. In either case, he
will have to involve the provider of the transit source in an
appropriate (voluntary) contractual bind—otherwise the latter
will be able to charge much higher transportation prices once the
facility is built.
The transportation entrepreneur will have an incentive to
entice the construction of additional buildings along the route of
his holdings. Given the original investment, additional costs for
additional riders are likely to be virtually zero. He can be