Management versus Ownership: the Road-privatization Debate

Roads are frequently cited as a public good even though economists have shown that privatizing the roads would solve some of the problems endemic to public roads, namely, high accident rates, congestion, and pollution (see Roth 1996, 1967; Block 1983, 1979, 1980). Economists have analyzed the problem of externalities and shown how the effects of freerider behavior can be contained. The question of natural monopoly has been carefully examined, as well. Block (1979) has formulated something of a model showing how a private order would operate. The aim of this present article is to focus on some specific justifications that have been given for government intervention in the market for roads. It will be argued that “commercialization” is not the same as “privatization” and that a private road system must be built on clearly defined property rights. What are the benefits that can be expect from privatization of the public roads network? It is difficult to answer without engaging in the methodological error of attempting to predict the results of the competitive market process, the very purpose of which is to discover the most suitable means of achieving ends. Economists make their most solid arguments when enunciating general considerations, based on a priori knowledge and general principles arrived at through means of deductive reasoning (Hoppe 1989, p. 1). At the same time, history provides some illustrative instances of privately built and operated roads.1 These examples demonstrate how private roads