There are two main theories of who should pay for bridges.
The first theory is that private businesses should build bridges, and that bridge users should pay for bridges. The private businesses which own bridges collect tolls from bridge users.
The second theory is that government should build bridges, and that taxpayers should pay for bridges. There are no tolls on bridges.
The main argument for private bridges is that bridges will be built more efficiently. The main argument for government bridges is that bridges will be used more efficiently.
Suppose there are two bakeries. The two bakeries are the same distance from you, use the same ingredients, and make exactly the same bread. The only differences between the two bakeries is that one bakery is on the other side of the river, and the bakery on the other side of the river has a more efficient oven, so that the bakery on the other side of the river uses half as much fuel to bake each loaf of bread.
The bakery on other side of the river has lower costs, because the bakery on the other side of the river uses less fuel. Since the bakery on the other side of the river has lower costs, the bakery on the other side of the river can sell bread for a lower price. Suppose the bakery on the other side of the river sells bread for one dollar less.
(Since the bakery on the other side of the river uses less fuel, the bakery on the other side of the river probably produces less pollution, and probably uses fewer nonrenewable resources.)
You should buy bread from the bakery on the other side of the river, because the bread costs less. (And because you are doing less damage to the environment.)
However, it is difficult to cross the river. The two bakeries are equal distances from you, but it is much easier to get to the bakery on the same side of the river. So you buy bread from the bakery on the same side of the river, even though the bread costs more (and you are doing more damage to the environment), because it is much easier to get to the bakery on the same side of the river.
Now suppose that a bridge is built across the river. Now it is equally easy to get to both bakeries.
Suppose you buy a new car, and the payments are $500 a month. One month you are short of money, and you decide to save $500 by taking the bus instead of driving the car. This does not make sense because you have to pay for the car whether you drive the car or not.
Now suppose that someone builds a bridge. To pay for the bridge, they charge a toll of $2 every time someone drives across the bridge. Suppose you want to wash your car. There are two car washes you could go to. Both car washes are an equal distance away. One car wash is on the other side of the bridge. The car wash across the bridge is more efficient; it uses less energy and less water. The efficient car wash across the bridge charges $3 less because it has lower costs. If you go to the efficient car wash across the bridge, you will save $3 but lose $4 because you have to cross the bridge twice. Your total cost is $1 less if you go to the inefficient car wash. You are rewarded for wasting energy and water.
Because there is a toll on the bridge, you try to avoid using the bridge to avoid paying the toll. But the cost of the bridge is the same whether you use the bridge or not. The bridge must be paid for even if no one uses the bridge.
Putting a toll on a bridge creates incentives for people to use resources inefficiently. But if there are no tolls on bridges, how do we pay for bridges?
The most obvious alternative to bridge tolls is for the government to collect taxes, and pay for bridges with tax money. But government spending is sometimes wasted. Many people say that if the government pays for bridges, then there is even more waste than if bridges are paid for with tolls.
Sometime in the 1980s I saw an article in Forbes magazine about the japanese construction industry. The article described a bridge between two japanese islands. There was a toll on the bridge. The toll was so high that a ferry service operated beside the bridge. The bridge was faster, but the ferry was cheaper. If all the people and vehicles which used the ferry used the bridge instead, then the cost of operating the ferry would be much less while the cost of operating the bridge would be unchanged. If everybody used the bridge and no one used the ferry, then the total costs of everyone in Japan would be less. People who use the ferry are saving their own money, but wasting other peoples' money. The toll on the bridge gives people an incentive to waste other peoples' money. The toll on the bridge results in misallocation of resources.
Sometime in the 1980s or early 1990s I saw an article in Forbes magazine about a mexican construction company. The mexican company had built a road from Mexico City to the Pacific Ocean near Acapulco. The government of Mexico gave the land to the company, the company built the road, the company collected tolls from people who used the road, and after some years the company was supposed to give the road back to the government and the road was supposed to become free. The tolls on the road were so high that trucks avoided the new road and used old roads instead, and the new road was used mostly by government officials driving to the beach in their limousines. Trucks using the old roads use more fuel and require more maintence. The old roads are slower, so trucks can make fewer trips, so more trucks are required. Tolls on the road discourage efficiency and result in misallocation of resources.
(A few years later I heard that the road was poorly built and deteriorated rapidly, and the company wasted so much money constructing that road and other roads that the tolls were insufficient to repay the construction costs. Then since the company had connections in the mexican government, the mexican government allowed the company to keep the road and keep collecting tolls even after the company was supposed to surrender the road to the government and the road was supposed to become free. A real free market government would have let the incompetent construction company go bankrupt. This was not known at the time of the original Forbes article, but the original article did say that the company got the road contract because the company had connections with the mexican goverment, not because of competence at building roads, and from that everything else could have been predicted. Had I been wiser, I would recognized this as a signal to short Mexico, and I would have made a fortune when the Mexican economy crashed a few years later.)
Example from article 'The Branding of Higher Ed' by James B. Twitchell; Forbes volume 170 number 11; November 25, 2002; page 50.
Article says college and university administrators neglect teaching and encourage things like early decision which are harmful to students in order to get a higher rating in U. S. News and World Report; and then they deny that they are doing these things. Article says they should stop doing these things and focus on teaching undergraduates.
If colleges really are making themselves worse in order to get a better rating from U. S. News and World Report, then there must be something wrong with the U. S. News and World Report rating system. Why doesn't U. S. News and World Report fix their college rating system? Why doesn't someone else create a better college rating system? Why aren't there multiple competing college rating systems? Like bridges, ratings of colleges are expensive to create, but cost little to use. If a rating agency charges a high price for a copy of the college ratings, people will try to avoid using the college ratings in order to save money. Resources have been wasted creating college ratings which no one is using. But if a rating agency charges a low price for a copy of the college ratings, the rating agency will not have enough revenue to cover the cost of creating the college ratings. The economic system fails to reward people who create high quality college ratings. The compensation for creating college ratings is so low that anyone who creates college ratings will create the cheapest possible college ratings. Thus college ratings include things which are easy to measure like the size of the endowment or the ratio of student applications to actual students; and college ratings exclude things which are hard to measure like quality of teaching.
Article says college administrators are doing the wrong things. I say college administrators are doing the right things. I say college administrators are responding rationally to an irrational system.
From The Voluntary City, chapter 15, Market Challenges and Government Failure, by Alexander Tabarrok, pages 417-8. This includes a quotation from the book The Firm, the Market, and the Law, by R. H. Coase, 1988, University of Chicago Press.
Conventional economics suggests, for example, that governments should finance bridge building because for optimum efficiency the services of a bridge must be priced at marginal cost-which is typically assumed to be zero. But in such a system how do we know whether the total value of the bridge exceeds that of the resources used to produce the bridge? Which of many possible bridge locations would maximize consurmer surplus? Should the bridge be four lanes wide or only two? With pedestrian traffic or without? Entrepreneurs acting in markets have strong incentives to pursue the best answers to these questions. Similar incentives are lacking and often perverse in government provision. Thus, Coase (1988a) argues that proponents of marginal-cost pricing give insufficient "weight to the stimulus to correct forecasting which comes from having a subsequent market test of whether consumers are willing to pay the total costs of the product. Nor do they recognize the importance of the aid which the results of the market test give in enabling more accurate forecasts to be made in the future."
I think that the benefits from government bridges exceed the benefits from private bridges. I think the disadvantages of government bridges and the advantages of private bridges are less than proponents of private bridges claim.
If the economy is at least partly based on free markets, then government bridge programs can be compared to private businesses, and government bridge managers can use efficient management techniques learned from private businesses. Government bridge programs in a partly free market economy will probably be inefficient, but are unlikely to be extremely inefficient.
Private businesses are probably more efficient than government in deciding where and when to build bridges, but not much. A bridge is a very long term investment, and it is difficult to predict how much demand there will be for a bridge ten years in the future. Deciding where and when to build a bridge involves a lot of guesswork. If random guesses about bridges work as well as careful plans, then private businesses will not make better decisions about bridges than government.
In some industries, private businesses are more efficient than government because private businesses are better at changing in response to changed conditions. If demand for washing machines is less than expected, a washing machine factory can be converted to make lawn mowers. But it is difficult to convert a bridge to something else.
The most important reason why the benefits of government bridges exceed the benefits of private bridges is that the benefits of efficient use of bridges are greater than the benefits of efficient making of bridges.
Some people try to compromise between private bridges and government bridges by proposing that the government should build bridges, but should collect tolls as if the bridges were private. This is a very bad idea. This combines the worst features of both government and private bridges.
Some people that bridges should be paid for by users instead of by taxpayers because it is morally wrong to require people who do not use the bridge to pay for the bridge. However, even if you never use the bridge, some of the businesses which you buy things from might use the bridge, and if the bridge is free, those businesses will have lower costs and the things which you buy will cost a little less. Also, the business which you sell your labor to may use the bridge, and if the bridge is free, that business will have lower costs and will pay you a little more. Even if you never personally use the bridge, you still benefit from the bridge. The bridge gives you slightly lower prices and slightly higher pay. It is not unjust to expect you to make a small contribution towards the cost of the bridge.
I propose that the government should eliminate taxes, and the government should require all people to give part of their income to their choice of public service organizations. The government decides how much money you give to public service organizations. You decide which public service organizations to give the money to. Public service organizations would build bridges. There would be no tolls on bridges.
Public service organization bridges should combine the best features of both private and government bridges. Bridges would be used efficiently because there would be no tolls. Bridges would be built efficiently because multiple bridge building public service organizations would compete for money, and people would give the most money to the most efficient public service organizations.
Bridges are a capital good because the cost of building a bridge is greater than the cost of operating a bridge. The capital/fixed/sunken costs exceed the marginal/variable costs. But bridges are not the only capital good. The question of who should pay for bridges is relevant to every other capital good.
Inventions, music, books, computer programs, and drugs are capital goods. All intellectual property are capital goods. It is just as inefficient to charge users of intellectual property as to charge users of bridges. All intellectual property should be free for the same reason that bridges should be free. But creators of intellectual property should be compensated for the same reason that builders of bridges should be compensated. The problem of how to compensate creators of intellectual property is the same as the problem of how to compensate builders of bridges. Creators of intellectual property should be paid in the same way that builders of bridges are paid.
Patents and copyrights give people an incentive to waste resources, just like tolls on bridges give people an incentive to waste resources.
For more about why there should not be patents or copyrights, see:
Open-Source Software: Who Needs Intellectual Property?; by Michele Boldrin, David K. Levine, and Alessandro Nuvolari; The Freeman; January 2007
Do Patents Encourage or Hinder Innovation? The Case of the Steam Engine; by Michele Boldrin, David K. Levine, and Alessandro Nuvolari; The Freeman; December 2008; pages 14-17
Patent Failure: How Judges, Lawyers, and Bureaucrats Put Innovators At Risk, by James Bessen and Michael J. Meurer, Princeton University Press, 2008; also summarized in Of Patents and Property, by James Bessen and Michael J. Meurer, Regulation magazine, winter 2008-2009, volume 31 number 4, pages 18-26.