4 ms·

I would think the acquisition of the land on which the road is built would be a larger problem for a privatized company than the actual construction and mainten

• Apocryphon 13y ago
  And where's the incentive for private corporations to build infrastructure for the public? Government isn't the answer to everything, but neither is the free market.
  • pmorici 13y ago
    um, they collect tolls?
    • rayiner 13y ago
      Toll roads run into the problem of positive externality. Specifically, transportation creates large positive externalities. A road creates economic benefits not just for people who use them to get from point A to point B, but direct economic benefits for stores, developers, and employers along the route. Tolls capture only the part of the benefit felt by people traveling on the roads. As a result, if you fund roads using only toll revenues, you'll end up building less roads than your economy needs.
      • natosaichek 13y ago
        So ask the stores / developers / employers along the route to buy-in on the road. Ask them to help pay for construction and give them a cut of the tolls proportionate to their investment. This lowers external capital requirements to create new roads. Tolls could be used primarily for maintenance and upgrades, but may have some profit associated to pay back the initial investment. If the associated nearby economic interests are invested in the road, incentives seem pretty well aligned to me. Thoughts?
        • rayiner 13y ago
          Why should the stores along the route buy-in? They'll get the benefit of the route for free even if they don't buy-in. As for giving the stores a portion of the tolls, that doesn't help, because you're still trying to recover all the costs of construction from a subset of the people who benefit from the road. Think about the math: say drivers benefit X from the road and stores and developers and employers benefit Y. Total social benefit is X + Y. With tolls, your incentive to build roads is F(X), insensitive to Y. So whether Y = 10x or 0.5X doesn't change your incentive to build the roads at all. In other words, the incentives aren't aligned with the social benefits.
      • pmorici 13y ago
        That's silly you can say that about a lot of things. If a large company builds its headquarters in a place that is going to have 'positive externalities' on the surrounding area too but that doesn't stop companies from locating their employees together in buildings because they are worried they might benefit other surrounding businesses. Roads as with anything have a symbiotic relationship with the nearby community. If there are no places people want to go along a route then people won't use it or pay tolls conversely if there is no road to get to a business no one will go there either.
• glenra 13y ago
  Privately built roads, railways and pipelines have often solved this problem in the past. One way to deal with the holdout problem is to just buy options on land along various alternative routes, then only exercise the options once they collectively add up to a viable path.