21.3.03

INSTITUTIONS EVOLVE TO REDUCE TRANSACTION COSTS. Where Worlds Collide points to a potential hold-up in a world of private roads. "At this point I get badly stuck. It is not difficult to see that this problem is not the fault of privatisation per se but the nationalisation that had preceded it. Had roads always been in private hands then these things would have been resolved a long time ago - probably via long-term agreements between land owners and road operators or possibly through all residents having a share in the road." Or having the neighborhood association own the road. That, as Reason reported in August 1981 (there are reasons I'm such a pack rat), is the practice in St.Louis, Missouri. (The article also reports that gated communities are an aberration of the Nineties ... the 1890s ... but that's another matter.) It's really not much different from a country club with equity memberships, in which each golfer owns a share of the club's lands. But the more interesting logical puzzle is this: where, exactly, do you draw the line between a private association and a unit of government?

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