Debate: Can we accomplish the privatization of roads in a small municipality?

I guess I'll just start with the basics: Who would pay for the roads? How would users be charged? What, in your opinion, are the advantages of a privatized road system vs. a public one?

The users. I think an electronic system would work best, but there are privacy concerns. A user is charged by how much they drive on the roads. This is similar to pay as you go cellphones. I think maintenance on private roads would be better, because there would be a profit incentive. Unfortunately coming up with a way to charge people for private roads seems like the hard problem. We can't be collecting tolls every time someone wants to drive, because that's a hassle. Also, what about people who can't pay their bill for a month or two?

Public roads are easy to fund. It's taken out of our taxes which we and our employers are complicit in handing over to government. Unfortunately when I drive roads each and every day I pine for roads that were built and maintained better.

I have some concerns about whether privately held roads that are run as a for profit business will really be maintained better than public roads. Also, if history has taught us anything, it's that share-holders always end up wanting a higher return on their investment.

First, Capitalism works because of competition. McDonald's doesn't charge $15 for a Big Mac because that would send all of their customers straight to Burger King. Also, Burger King has to try to keep its product quality high, since poor quality will send the customers right back to McDonald's.

Competition is also a driving factor on long toll ways. I'll use the New Jersey turnpike as an example. While driving from my home to New York City, I hit a pot hole on the NJ Turnpike that knocked my front wheels slightly out of alignment. Needless to say, I went home a different way. The NJ turnpike lost my business because their quality was low. This has nothing to do with the fact that the NJ Turnpike is a toll road, I'm just using the story to illustrate the fact that there are many roads that can compete with other roads.

I'm just curious about what incentives the private road company in this hypothetical municipality would have to keep prices low and quality high. I'm not sure about where you live, but there's only one road leading to my house. If that road is out, then I can't drive to my house. I can't see how to make roads compete unless you have two or more roads going to every destination and have competing companies maintaining competing roads whenever possible, which seems redundant and wasteful to me.

Second, investors always want the greatest possible return on their money. Profits are income minus expenses. There are only two ways to increase profits: increase revenue or decrease expenses. If all the roads in this small municipal area are private, then the number of users is pretty set: everyone who lives in the town is a customer. Sure, some people might move there and some people might move away, but basically your customers are every person in the town who uses roads. Having said that, the only way to increase profits is to either raise the prices for using the roads or lower the amount spent maintaining the roads.

These are just my initial thoughts on the subject. I'm sure we can get into more specifics if we need to.

Sorry for the late reply. I have been on vacation and mulling a job offer.

It seems maintaining multiple roads to a location is an impractical solution. What seems more practical is a solution where good road construction companies are rewarded while bad road construction companies are punished. It seems like leasing roads to a private company is a potential solution.

The leasing works in this way. Road construction companies openly bid for a road parcel. A road parcel is an area where roads may be built or are maintained. The bid includes a payment to the town for the ability to build and maintain roads in the parcel and the annual cost to each residence on the road. To simplify the discussion, assume the lease duration is the same for all bids. We can revisit this later. The winning bid is chosen by referendum on Election Day.I think this is a promising solution, because voters need to choose which bid reimburses the town the best, has the best annual cost per residence, and the company with the best reputation behind it.

Why does this have the potential to work? The town makes money on roads instead of losing money, because it is selling the rights to build and maintain roads in an area. Residents win, because instead of dedicating a flat sum to roads they are able to lower costs by choosing a competitive bid amongst many. Road companies win, because they will submit bids that allow them to make money over the duration of the bid. They are incentivized to do well, because towns have the ability to terminate the lease if certain criteria are not met and can use the payment to hire another company to do the work. Furthermore, road companies want to succeed, because good work done on one lease can be used as a campaigning point for other leases.

I admit my solution is far from complete or perfect, but I think it provides a good base for debate. What are your thoughts on my points? Thanks for reading.