Sell the streets

Privately maintained, operated, and priced roads could solve many problems that plague commuters today.

The problem with the government
Congestion is the most obvious problem.Delayed traffic has increased more than 25 percent since 1995 and 157 percent since 1982.All too often, politicians adopt largely symbolic, if colossally costly, projects like light rails that do little to relieve congestion.Finally, when the government does spend money on roads, it is often not on projects that best serve drivers. When new roads are built, they often are not the ones most needed, and maintenance of existing roads is often sacrificed for the more public demonstration of building new roads.
Congestion, like long lines, is a sign of a shortage at the legal price.We have a shortage of road space because people do not have to pay for road use based on the scarcity of road space relative to demand.


The advantages of private roads
Private ownership creates incentives for owners to build, maintain, upgrade, and innovate their roads in order to maximize their profits. Market prices not only enable owners to gather the necessary information to best manage their roads, but also serve another important function: They cause drivers to take account of the scarcity of road space and economize on its use.

How would a system of private roads operate? Private companies would be allowed to construct major highways, bridges, and tunnels or to purchase existing ones from the government. The companies would then charge tolls to pay for the roads' acquisition and maintenance costs and to make a profit. Because owners would profit by better serving consumers, they would have an incentive to ensure that their roads were safe and fast and that they led to where people wanted to travel most.Flexible pricing causes drivers to account for their contribution to congestion and improves efficiency by allocating scarce road space to those with the highest demand for it.


Accidents between drivers are externalities on government roads. When roads are privatized, though, the externality is internalized to the owners of the road, who will lose profits if their roads are unsafe.