|
""Repairs need to be made. ... Road signage (or data if we leave it up to car producers) needs to be updated [but they need it to be collected and either trasnfered or sold to them]. ... Interest payments to bondholders need to be paid, and wages of repairmen need to be spent. The debt burden is taken on before all other costs." This is all correct enough, but none of it alters the economics of road provision." Why not? How otherwise does MC fall to zero - I believe so far this is only applicaple to public goods. ""What do you mean by medical work anyway? Does that include pharma? When industries get large enough, they become constant marginal and average cost industries. ... The marginal costs of such an operation do not fall to zero because the quantity produced initially is set (changing this is a marginal cost), they merely become set. As the marginal cost for labour is derived from the demand for the road, marginal costs can only do that if the project is abandoned or has no users. The properietors must pay pre arranged debt on the stuck marginal costs, at LEAST. - And most likely, private construction and banking will see that it becomes a industry with constant returns to scale." As far as I can comprehend it, most of this is incorrect or not relevant in the road debate context. For example, the marginal cost of labour is not dependent on demand for a road. Nor is the quantity of output (road trips) set by the construction of the road - it only sets the maximum quantity of output. Further, in the absence of congestion, the marginal cost of output is essentially just the pavement damage and other maintenance costs of each motor vehicle trip along it - virtually zero for cars on good roads such as the Hume. The medical work referred to the work of doctors, not drug companies - and should have been obvious from the context of the statement to which I was responding." I beg to differ that the marginal cost of labour is at least demand dependent upon the value and profitabilty of the final good in every industry - in this case, the road, inpaticular, the marginal revenue product and value of the marginal product. With low maitenance swere built with more expensive labour, and still need to repay bonds. No, medical work is not relative to roads - hospitals, medical equipment, the base of scientific knowledge and actual infrastructure is. The largest of private industries have a constant average and marginal cost schedule, hence their competitive advantage. Why isn't this relative to private industry allocating roads? ""What is a duplication of infrastrucutre.....you don't say it is the creation of more nodes in a network which bring about more opportunity in other multiplicative ways ... So if someone builds a turnoff from Parramatta Road directly to either a housing establishment they clear and prepare themselves, or directly to Baulkam Hills, this is wasteful?" Building a turn-off to an area for which there is no turn-off clearly isn't a wasteful duplication of infrastructure. That said, my earlier response to Strawman may have been worded incorrectly as I presumed (in hindsight, probably wrongly) that he was talking about the provision of additional roads in a situation in which there was unregulated competition - and thus monopoly pricing. However, it seems probable that Strawman meant that it should be fine for private firms to build new roads in the current circumstances (ie in which the government provides most roads and prices them at zero)." Firstly, show me an example of privately allocated infrastrucute being wasteful, and say why. Secondly, no, no it isn't right to say that. "unregulated competition, monopoly pricing". Name one monopoly or oligopoly that prices competitively which isn't supported by or given franchise by Govenrment. Why do you assume centrally planned non competitive road allocation won't be wasteful, allocatively? We all know they are productively inefficient.
| 
