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Sorry ABL, but in my view your post contains an array of statements that are either incorrect, irrelevant to the debate and/or make points that have been previously addressed. This has become frustrating. I requested last time that you check my previous posts before introducing "new" arguments or making what are presumably meant to be counterpoints. It seems clear that you have not done so. Three examples follow. As diminishing returns have now become negative returns, this will be my last post on this subject.
The relevant pricing is whatever people are willing to pay, under free competition. As previously argued, competition is unlikely is have much pricing impact in the case of many roads. Where a road is a monopoly and entry barriers curtail entry, "free" competition will result in prices that may significantly exceed the marginal cost of road usage.
Do developers view the cost of building an apartment building as a sunk cost when determining what sale or rental prices they can get, whilst they are in the planning of the building? No, but I have never claimed that they (or prospective road investors) do and the argument is not dependent on such a view. My point was and is that prospective investors know that the fixed costs of the incumbent will be treated as sunk by the incumbent and this affects their (the prospective investors') assessment of the returns they will receive if they invest in a competing road. This is standard economics.
You mention the Barton/Federal triangle, and call it wasteful, because you don't see it as useful. Again this misrepresents my earlier arguments. I have never said that those roads are "wasteful". All I have said is that the Barton-Federal "alternative" does not exert any significant pricing pressure on the Goulburn-Yass section of the Hume.
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