Quote Originally Posted by rong View Post
A short version, ignoring math and graphs, the monopoly version of a road prices itself to max profit which typically is at a higher price and lower supply than perfect competition. This economic profit (profit beyond that received at free market price) is what you're saying is the incentive for a new supplier.

But 2 things effect this. Firstly the entry barrier of massive costs to enter the market ie build a new Road. Secondly the road has a maximum supply which the incumbent can take advantage of whenever it sees fit. This excess is pretty much the same as a factory increasing production capacity and not using it as a message to competition that it is willing to compete on price if required, thereby instantly removing the economic profit that exists in the status quo that is the incentive for a new entrant. And it's a very credible threat because the incumbent wants to maximise profits, hence it's current monopolistic pricing strategy. So a natural move for the incumbent upon realisation of a new entrant is one of 2 things. Either reduce price to competitive market points which will be standard profit maximisation or alternatively use the excess supply it has and reduce price below the competitive price at the cost of short term profit with the intention of crippling new entrant and then once new entrant fails increasing price back to monopoly profit maximisation point.

So with roads this is built in to the basic set up which is why it creates a quite natural monopoly.
I'm going to skip arguing your points. There is something else I want to address.

So with roads this is built in to the basic set up which is why it creates a quite natural monopoly.
If I'm hearing you correctly, you're arguing that the reason a market is bad in this scenario is because it can create a monopoly, and your solution is to have a different monopoly instead? To be clear, you're saying a private company could have a monopoly, the bad part of this scenario is the monopoly factor, and therefore we need the state monopoly instead.

I don't know if this type of thing helps you, but this sort of contradiction in my own logic is what led me to reevaluate my views.