Тег: Roads

The Only Road

Suppose road is the only one leading from point A to point B. Accordingly, a monopoly arises, and entrepreneur raises the price to an enormous value. In theory, some entrepreneur should appear who will break the monopoly and build their own road ; let’s assume that is what happens. After this, the owner of road simply lowers the price to the market rate, and entrepreneurs 1 and 2 compete. So what is the benefit for entrepreneur to break the first one’s monopoly if they get no advantage from it?

The situation modeled in this question does not correspond to the processes that actually occur in the market. Following this logic, after a certain business appears in a specific location, no one else would open a similar business there because it would be unprofitable. However, we observe something entirely different. On one street, you can almost always see several grocery stores; in one shopping center, several restaurants; in one building, several offices of different insurance companies, etc. A new business opens as long as any acceptable profit can be made from it, because that too is profitable.

Furthermore, let’s consider the specific case of roads. Even a monopoly owner of a road on a certain straight line between two points is unable to excessively inflate the toll cost simply because they are not actually a real monopolist. If people feel that this “monopolist” is hiking prices too high, they will decide that it is more profitable, for example, to take a detour that goes through point “C” between points “A” and “B,” or to use some alternative mode of transport (rail or air), or, in the extreme case, to travel off-road entirely. Therefore, even without direct competition, the monopolist cannot set the toll significantly above the market rate, as such a decision would bankrupt them. Nevertheless, it is still profitable for them to own the road, as they are still capable of generating an acceptable profit from it. Similarly, it will be profitable for any agent who decides to build another road parallel to it.

Vitaliy Tizun

Kickstarter for public goods

Bitark’s Column

In discussions between libertarians and statists, the question “Who will build the roads under ancap?” comes up almost every time. There are many possible answers to this, but I have not encountered a beautiful, universal solution for the problem of providing public goods in a stateless society. At least not until yesterday, when in a stream by the “Antigovernment” community, Savva Shanaev introduced an idea by Alex Tabarrok that is little known in Russia: “Dominant Assurance Contracts”.

Public goods include a wide variety of benefits that anyone can use regardless of whether they paid for them or not — roads, bridges, street lighting, storm sewers, lighthouses, protective dams, herd immunity resulting from universal vaccination, law enforcement, strategic deterrence, waste recycling, sewage treatment, public parks, and much more. The main problem with their provision is the free-rider effect. When it is impossible to charge for the use of public goods, no one will simply pay for them, viewing them as a “given” or hoping that someone else will pay.

The stationary bandit (the state) constantly exploits this to prove its necessity. State propaganda claims that only the state can build roads and bridges, and therefore a territorial monopoly and taxation are needed to fund them.

However, there is a simple and clear way to provide public goods in a completely free market. It has already been implemented on the well-known platform Kickstarter, and without the state, it will be used far more often than it is now. The principle of its operation is roughly as follows.

For example, residents of a neighborhood are tired of breaking their legs and damaging their cars in potholes on the road. An activist contacts a road paving company and gets an estimate. Then, they go to a crowdfunding platform and create a fundraising campaign, specifying the required amount and the deadline for collection. They send letters to the neighborhood residents asking for any possible assistance in funding the road repair and provide a link to the crowdfunding campaign. Anyone can go there and see how much money has been contributed so far, how much more is needed, and when the collection ends. If the required amount is collected by the deadline, the campaign is considered successful, and the road repair company receives the order. If the full amount cannot be collected by the specified date, the money is returned in full to the residents. It is their choice; it means they truly do not need the road repair, and it is absolutely unethical to rob the population of the entire country through taxes to repair their road. Those who cannot stand living without a road move to neighborhoods with a more demanding population, and over time, a natural separation occurs based on the level of demand for infrastructure quality.

Everything is fine, people are satisfied

Who will own the street under ancap, and why won’t we get a situation similar to feudalism, where in order to get from point A to B, one must cross streets, the owner of each of which has set some incredible toll?

JediKnight

Here I will once again refer to Evgeny Kvasov and his post about roads. In short: the most natural owner for a street is the owner of the real estate that the street passes by, because the value of the real estate directly depends on the quality of the communications.

If there are many real estate owners, they have many reasons to agree on how to maintain the road, and not a single reason to create obstacles to passage — this sharply drops the value of their assets. A situation in which the houses along the street belong to some people, and the street itself to others who have no relation to these houses, is possible, but in that case, the company managing the street must have clearly fixed obligations regarding the operating mode of the street.

Houses always come first, and the street arises later, specifically so that one can move from the house to some other location. Residents may tolerate a temporary closure of the street for some alternative use if this closure is coordinated with them and they are paid for the inconvenience. But normally, they will always demand free passage and access, and strongly oppose any arbitrary action that hinders this very passage and access. Any checkpoint will be a negative externality for them, and that is already grounds for a lawsuit. Maintaining checkpoints will be quite expensive. They won’t pay off.

Now, under a state — that’s a different matter. Here, houses may belong to people, the street to the municipality, and traffic on it be regulated by the central authority. With such an approach, collisions are inevitable, where the interests of the residents are not taken into account.

A private street in Sydney