January 5th, 2005
Private Roads
I often hear arguments from skeptics of capitalism about roads being a “natural” monopoly, so I decided to write up a fictional account of how a private road system might function. Needless to say, this is just one potential scenario that markets might create. It is impossible to say what arrangement entrepreneurs would actually organize.
Several major transport investment firms pay hundreds of road-building contractors to build a honeycomb of speedways covering the country. The speedways function as rapid transit hubs and provide access to traditional flattop as well as maglev and airborne routes concentrated in and around urban areas. To save costs, the road-building ventures sign deals with property owners to offer them various transportation rights, which usually end up on the road rights market until purchased by a community that desires access to the national network. Just as with data networks, the speedways inevitably find it more profitable to create free interconnects to their competitors. One or more integrated scanners provided by several national firms are located at every exit and entrance of a speedway to read travel passes that provide a given user’s account information. It is common for long-distance travelers to switch among several travel passes just as they would with credit cards (many credit cards also function as travel passes) to take advantage of benefits, discounts, free miles, or for privacy reasons.
When it comes to developing new routes, road builders have found many methods to make a mockery of the old fallacy of the “natural monopoly” in the road market – even though stubborn property owners and competitors try their best to outfox them. They can build around, under, and even over other roads and properties – usually after getting judicial insurance to back up their claims. More often than not, the insurance warrantee is sufficient evidence for the property owner to negotiate a compromise rather than miss a profit opportunity. The most common strategy however, is the traditional purchase option contract, whether obtained prior to construction of a roadway or as part of a contract inherited by the owner when he first purchased his property.
The market for transportation within cities and communities is highly complex and specialized. In large urban areas, a city corporation owned by residents and investors is charged with providing a few basic services, such as trunk city roads, speedway off-ramps, firehouses, and emergency services. Smaller communities tend to provide a greater variety of services, as the stock prices of citycorps tend to vary inversely with the number of industries they attempt to manage. Within the many residential townships of a given city, division roads are owned by a combination of investors and lot owners, depending on their age and wealth of the township. Smaller communities pay the city to manage their roads while larger ones contract with road maintenance outfits on their own. The city itself contracts with road builders, maintainers, highway patrols, insurers, and other services necessary to provide these services. Within commercial sectors, transportation is provided by the real-estate moguls or corporations that own or prospect that sector or specialized commercial management services.
The creation of both commercial sectors and residential complexes follows a similar pattern: after a property development company has prospected a sector for development, it will seek out the purchase and contracts options necessary to develop it. Options with speedways, city trunk lines, utilities, communications providers, and security firms are prepared and invoked once development begins. The sector is sold to individual investors who agree to the building and land use codes established by the developer. Once a sector is commercially viable, the developer will lease or sell management rights to a sector management service or the city itself.