The Public Purpose
Number 36 - April 2000

Competitive Provision

To the extent that there is an infrastructure crisis in urban or suburban America, then, it is a government infrastructure crisis.

No such crises exists with respect to the infrastructure provided by the private sector. The traditional commercial user pay system of financing the building and operation of infrastructure continues today with respect to those services provided by the private sector, generally water service, telecommunications, electricity and natural gas. Companies in these businesses have the advantage of operating with little or no political interference in their commercial decisions. As a result, the financing crises that typically plague governments have little impact on privately provided infrastructure. The situation is similar to other private commercial sectors, where companies price and provide services and products largely in response to the market. As a result, in both private infrastructure and the remainder of the private sector, there is normally no shortage of goods or services and no cost crisis.

Recent technological advances, however, have made competitive roadway provision feasible. In Singapore, road pricing programs automatically collect tolls from drivers, using overhead gantries, while Toronto's new Route 407 automatically collects tolls as drivers pass at freeway speeds.

As a result of the automated tolling and electronic road pricing advances (above), it is now possible for communities to competitively franchise their roadway systems, thereby de-politicizing roadway provision, while improving efficiency and effectiveness. This could be accomplished by a competitive procurement in which a community specifies various standards, such as averages speeds, levels of service, safety considerations and capacities. Competitive franchising of local or regional roadways would reduce or eliminate political interference that might otherwise lead to less than optimal roadway investments. An important consideration will be to keep the conversion to competitive road franchising "revenue neutral," so that users do not pay both road user fees and fuel taxes.

At the same time, roadway authorities should develop plans to improve roadway systems that are able to accommodate the demand for travel. Such a course of action would not be without difficulty. In congested suburban areas, it would be necessary to build and expand roadways through developed areas. However, the mistakes of the 1960s and 1970s, when government failed to "level' with the public with respect to the consequences of canceled freeways, should not be repeated. The public deserves to be made aware of the choices. It could be that there will be insufficient political will to take the actions necessary in such areas to accommodate the demand, but at least a choice will have been made based upon complete and reliable data. With respect to developing areas, both development and implementation of plans to accommodate traffic volumes will be more simple.

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