Electronic tolling –
which even some state governments today have implemented –
is an efficient, time-saving alternative to manual payment
of tolls at booths. Road users might register their vehicles
with the private road in advance and in exchange receive an
electronic device that they might put on their cars.
Whenever the car enters a given stretch of road, the
electronic toll booth will communicate with the device to
subtract the amount of the toll from the user's account.
Other roads might offer yearly or otherwise periodic
membership plans, with payment made in advance. Then, the
checkpoint on the road will only verify electronically
that the customer has purchased the membership. Of
course, neither the electronic tolling nor the verification
of membership will require customers to stop or even slow
down; they will just need to pass through the appropriate
checkpoint. This can already be done now, and private road
entrepreneurs – faced with hard budget constraints and
driven by an intense profit motive – will figure out ways to
do it even more conveniently and effectively. They will
encourage the development of technology that will further
reduce transaction costs of assessing charges to road users.
Not all private roads
will even require users to pay. As already discussed, some
road entrepreneurs might also be business owners who offer
their roads as a complimentary service to customers in the
hope of thereby increasing their sales revenue. Other road
entrepreneurs might generate their income primarily through
advertising – just as numerous television stations, radio
stations, and Internet sites do today. The advertisers will
pay for the maintenance of the road, the salaries of the
road workers, and the profits of the entrepreneur; in turn,
they will be allowed to feature prominent billboards
alongside the road or otherwise creatively promote their
products within the road entrepreneur's territory. The
private advertisers, too, will be given incentives to
innovate in their techniques under this system. The road
entrepreneur might create electronic billboards that
multiple advertisers could use during different seasons or
times of day. Some advertisers might invite customers to
sample their products at roadside gas stations or
convenience stores. The advertisers might even encourage
individual car owners to place stickers with certain names
of products on their vehicles – in exchange for product
discounts or free use of affiliated private roads.
Different road
entrepreneurs will affiliate with different kinds of
advertisers – depending on the tastes and preferences of the
customers using the roads. High-minded customers who do not
wish to see advertisements for "adult stores" or films with
gratuitous gore and sexuality can choose to patronize roads
that affiliate with advertisers of more respectable products.
On the other hand, customers who do not mind these kinds of
advertisements can use roads paid for by the companies that
release them. The conflict of interest that prevails on
today's government roads need not at all occur. With
"public" ownership of roads, some parties will inevitably be
displeased regarding the kinds of advertising that does or
does not appear alongside the roads. Some might object to a
questionable billboard that the government has decided to
approve, while others might be frustrated that more
such advertisements had not been permitted. Road
privatization solves this problem by giving customers the
choice to use private roads with advertisement policies that
suit them. Under this system, no one is forced to see an ad
he dislikes or be barred from seeing the one he wants.
The Benefits of Competition and
Cooperation |
A twofold objection to this plan might arise. First, could
not a single purchaser of a few IIS render a vast network of
roads unattractive to customers by charging unreasonably
high tolls? Second, would not the vast number of different
road owners in the same vicinity tend to lead to numerous
and confusing different standards of road quality, rules of
the road, payment systems, degree of enforcement, and other
aspects which would be under the control of each private
entrepreneur?
The first objection can
be rendered null through market competition. A road
entrepreneur who charges tolls significantly above those of
his competitors will, other things equal, lose business to
other road entrepreneurs. It is easy to build roads in
parallel so that multiple thoroughfares – all in the hands
of different owners – lead to the same destination. The vast
network of private railroads in 19th-century America
accomplished just this and prevented railroad companies –
where they were truly private and unsubsidized by government
– from charging monopoly rates for their services. In fact,
persistent competition among private railroad companies
often drove railroad rates extremely far down,
sometimes even to below cost. Once government began to
regulate the railroads through the Interstate Commerce
Commission and misguided anti-trust policies, however,
railroad rates skyrocketed and quality of service plummeted.
Roads for automobiles are
easier to build and more profitable than railroads. They can
carry much higher traffic volumes per unit of time, and many
more of them can exist in the same geographic area compared
to railroads. If necessary, parallel roads could be built,
spaced several hundred meters apart, enabling competition
for any given traffic route to flourish, driving down
consumer prices and ensuring that no road entrepreneur could
for long maintain tolls significantly above those of his
competitors unless his road is superior in quality and in
other ways more attractive to his customers. Of course,
owners of cleaner, more durable roads that provide higher
quality of service will be able to charge higher rates and
remain in business – but this will be a result of simple
product differentiation. Just as customers today are willing
to pay more for larger, safer, more comfortable cars, so
they will be willing to pay more for more attractive roads.
The second objection can
be resolved by collaboration among road entrepreneurs in
standardizing certain payment features and rules of the road
– just like private railroad companies in the late 19th
century collaborated, of their own free will, to establish
standard rail widths and agree on certain basic rules of
railway traffic control. A fairly uniform code of maritime
etiquette and procedure has also developed over the
centuries, despite no governmental control over most large
bodies of water. Where it is convenient for them and for
customers, different road companies in an area might render
the same electronic tolling devices compatible with the use
of each road; the several road entrepreneurs might also
agree on basic rules of the road, such as the shape of road
signs and rules for signaling, merging, and passing. This
standardization will not, however, be a one-size-fits-all
top-down imposition. It will evolve spontaneously from the
collaboration of self-interested market actors who pursue
profit maximization and the satisfaction of their consumers.
Unlike the virtually uniform rules of the road under
government ownership, some significant product
differentiation will remain – exactly as much as suits
actual differences in customer preferences. This
differentiation will especially be marked in such areas as
advertising, stringency of rule enforcement, and esthetic
elements of the road. Some entrepreneurs will want to
provide their customers with spectacular roadside views,
including gardens, trees, murals, and elaborate designs on
the pavement. Others will pride themselves on building cost-efficient
roads which can be built at minimal expense without
requiring extensive regular repairs.
Examples of Successful Private
Roads |
Not only can private roads succeed; they have
succeeded in numerous instances around the world. The Walt
Disney Company controls freeways six lanes wide in the
vicinity of Walt Disney World in Orlando, Florida. This
complex of roads, called the Reedy Creek Improvement
District, services millions of tourists to Disney's theme
parks.
Since 1995, the private
Toll Road Investors Partnership II (TRIP II) has owned and
operated the Dulles Greenway – a toll road between the
Dulles International Airport in Washington, D.C., and
Leesburg, Virginia. The Greenway is a scenic, spacious six-lane
road separated by a strip of well-kept grass. It
accommodates traffic at a maximum speed limit of 65 mph. The
toll is a uniform $3.00, independent of the driver's entry
and exit point on the road; payments are assessed
electronically, and the road uses no traffic lights to
minimize delays. TRIP II is continually developing ways to
enhance road quality, and is at present attempting to widen
the road and create an additional access ramp for travelers
to the Dulles Airport.
Not only single roads,
but entire cities have experienced the benefits of road
privatization. Since 1993, the Seattle, Washington,
metropolitan area has been implementing gradual
privatization of all its roads; the transition has been
smooth, and all 135 miles (about 217 kilometers) of
Seattle's roads are well on their way to full private
ownership.
In India, the highest-quality
roads are a privately owned network of expressways, owned by
road companies like the GVK Group. These private roads
coexist with a government network of highways – which tend
to be of inferior quality and do not facilitate speeds as
high as those possible on the private expressways. The M6
Tollway in Britain – a stretch of 27-miles (43 kilometers)
is privately owned and operated; about 56% of Italy's toll
roads are privately operated by the Autostrade Construction
Company. Autostrade has been at the forefront of road
management innovation; it instituted electronic tolling on
its highways as early as 1988. The economic life of Toronto
in Canada is greatly benefited by Highway 407 ETR, which
assesses all tolls electronically – even for cars that do
not have the electronic tolling device or transponder on
them. The highway's owners use devices that recognize the
car users' number plates to later send bills for highway
usage to their addresses.
These numerous examples
of efficient, innovative, and lasting private ownership of
roads throughout the contemporary world – along with
theoretical analysis of how such private ownership could be
facilitated any why it would lead to greater benefits than
government ownership of roads – suffice to demonstrate the
possibility, desirability, and opportunity of road
privatization. This development has already begun throughout
the world, and its evident advantages should bring about its
substantial acceleration. We can only hope for the speediest
possible transition of as many roads as possible onto the
free market.
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