From: Rafal Smigrodzki (rafal@smigrodzki.org)
Date: Wed Feb 19 2003 - 08:11:53 MST
Randall Randall wrote:
> Rafal Smigrodzki wrote:
>> Daniel Ust wrote:
>>
>> (It would a lot better, here, to privatize roads and
>>
>>> then have a full free market for transportation -- instead of the
>>> mixed economy we have there now. It would also, in my mind, be
>>> more Extropian.:)
>>>
>>
>> ### I have been thinking about this issue for a long time. It sounds
>> very attractive, to have private, competing highway systems. One
>> thing bugs me however - the acquisition of the land for roads would
>> be quite difficult. You couldn't use eminent domain (or could you?).
>> A single holdout on the path of a planned highway could demand a lot
>> of cash, or scuttle the project altogether (e.g., the owner of a
>> mountain pass). This would drive up the prices. Also, in certain
>> situations, if the ownership of roads in an area became concentrated
>> in one hand, there would be the risk of monopoly rents being
>> extracted from the citizens.
>>
>> How could you solve these problems?
>
> Set up a public board (perhaps on the web), with a map divided into
> small plots, or using the actual property lines, and announce
> planning to build a road from point A to point B. Anyone on the map
> can post the price for their property, even if not on a direct line
> between A and B. If participation is low,
> you can offer incentives to visit the site. When enough people have
> made offers that the map is fairly well covered with land which has a
> price, you can pick the few routes with the least apparent cost, and
> try to negotiate them down. Each person you're negotiating with
> understands that you're looking for the lowest cost, and trying to
> hold out for more money makes it more likely that you'll just go
> around.
### This is a very juicy piece of stuff to think about.
The placement of a road involves a number of trade-offs, between keeping it
short (increasing the long-term efficiency), simple to build from an
engineering standpoint (for a short-term gain but at a long-term efficiency
loss), and cheap to build depending on land price (short-term gain vs. long
term loss if a longer but cheaper route is built). You could actually
publish a map containing the calculated relative prices for each piece of
land that you are willing to pay based on the trade-offs. The property
owners could see how important their particular piece of land is to the
builder, and perhaps would not be motivated to ask for more because of an
additional consideration - if you block the building of the optimal road by
refusing to sell your land (if it's located within the shortest and simplest
route), the builder could build around you, but refuse to give you access to
the road. You would have all the hassle of having a road (noise) but no
benefit. The optimal solution for the property owner would be to sell the
land at the price derived from the calculation of efficiency and the average
land price in the area. Of course this would depend on the judicial
standards regarding liability for noise and pollution.
I can see that the complicated mechanism I proposed is an attempt to produce
the economically optimal outcome (the shortest and chapest route) in 100% of
cases, but at an administrative cost. The simpler system described by
Randall should work less efficiently, because sometimes the land owners
would still block the optimal route (especially in cases of high
concentration of land ownership), but the administrative cost would be
lower. Richard Epstein wrote that trying to fix a rule that works 95% is
usually not worth the extra cost, and simplicity usually trumps complexity.
OK, I agree that Randall's system would most likely work, and it is possible
that it would work better than the hostile buyout system but I'd rather like
to see these methods tried in practice and compared in real life. May the
better (cheaper, more efficient) win.
Rafal
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