Quote Originally Posted by Renton View Post
It's actually likely that with free market roads most people would be paying less than they do now. As I mentioned before, the taxes don't really work because they aren't invested into new roads, they're often just spend on whatever the state wants to spend them on. They are also assessed in such a way that costs are flat. Someone driving twice as much doesn't pay twice as much as the average driver. Someone driving during rush hour doesn't pay more than someone who drives to work at 6am. The taxes are by and large a terrible disincentive for road overuse.



True monopolies are MUCH harder to create than the conventional wisdom suggests. There are almost always alternatives for any good or service in the economy, and where there aren't alternatives, there often are substitutes. There's simply never going to be a situation where a huge percentage of the people will not be able to afford to go to work, because there would be a huge profit in store for the entrepreneur who solves that problem.

Yes, roads are different from most services in that there are fewer distinct and different ways for them to exist. As for your example about the road connecting two cities with not enough traffic to support an additional road, that's simply impossible in a state of price gouging. The monopolist owner cannot raise his price past a point where it would attract a competitor to build an alternate road. As he gouges the price higher, there would necessarily be enough traffic for another road, because the amount of traffic on a road fluctuates based on the price of driving on that road.

In this way, we actually need to reevaluate our definition of monopoly. It is not simply the state of there being only one provider of a good or service. The criteria is more strict:

1) The monopoly is the only provider. (ex. it's the only road between A and B)
2) The monopoly prevents others from providing the same service. (ex. there are no other feasible places for roads nearby)
3) The monopoly prevents others from providing substitutes for that same service. (ex. no subterranean or superstructure can feasibly be built, no other modes of transportation are possible)

Even in the case where all three of these criteria are satisfied (this is unbelievably rare), the monopolist still can only gouge to a certain point because he must maximize his profit. This is like in poker when you're value betting the river with the nuts. You bet the maximum amount that will get called the highest percentage of the time such that the EV is maximized. Getting a 1/3p bet called 100% of the time is more profitable than getting a 3x pot bet called 10% of the time.
This is just wrong. I'll explain why when I get a chance today.