Towards a Free-Market for Curb Space

I’m so much of an advocate for free-market policy, I even think it should apply to city curb space.

Somebody not rooted in the urban planning world might ask: how possibly could cities do that? Especially considering that curb space is government property?

Market use of curb space is at the root of smart transport policy. It’s hard to have functioning private buses—much less the bike-share, scooter-share, or moped-share I often call for in this column—without letting urban right-of-way respond to consumer demand and price information. There’s existing literature on how that can be done, namely the 1997 market urbanist classic Curb Rights: A Foundation for Free Enterprise in Urban Transit.

The book was co-authored by Daniel Klein, Binyam Reja, and Adrian Moore. It was published by the Brookings Institution and was extensively sampled that year in The Independent Review. The premise was that mass transit works better as a private rather than public function—”it makes no more sense for government to produce transit than it does for government to produce corn flakes”—and that free-market curb policy facilitates that.

In section 1, the authors describe the problem that is government transit. Some of their criticism is philosophical. They cite public choice theory to explain how government monopolies have ulterior goals that compete with the goal of providing goods or services. Invoking the Hayekian critique about knowledge: in a chaotic industry like transit, which caters to shifting population and movement patterns, bureaucracies won’t adequately respond, since they thrive on politics not profits. Under common ownership, routes will be poorly planned, inefficiently operated, and without frequent strategy pivots.

But the authors don’t just indulge in theory: they have numbers to show how these Hayekian and public choice critiques played out in real life. In the decades after U.S. transit went from a private regulated monopoly to a public one, performance dropped drastically. Between 1960 and 1992, transit ridership remained steady, but operating costs increased and revenue dipped. This dysfunction has continued into the 21st century, sending transit systems into what experts call a “death spiral.” 

In section 2, the authors describe how private transit thrives in comparison. Wherever it is allowed, which, interestingly, happens more in developing countries with weaker institutions, a complex jitney system surfaces to provide customized services using local knowledge. The jitneys end up being cheaper, safer, more flexible and all-around better than public transit. This includes in the U.S., where jitneys once existed en masse before getting outlawed. 

A more institutional case of privatization the authors cite is Britain. In 1985, it reorganized public bus lines as private companies and liberalized where they could operate, who they could hire, and what schedules they could set. This lowered operating costs by 40%, increased labor productivity by 42%, and increased service levels. The same jitney minibuses that were common throughout the 3rd World suddenly popped up in Britain.

Privatization did cause some bugs in the system there. Once companies provided good enough services to attract patrons to curb stops, interloping competitors would predict their schedules and jump in to steal customers. This aggressive behavior can be problematic, causing safety issues, tit-for-tat scheduling wars, or attempts by the incumbent company to flood certain routes and create a monopoly. But above all, it can cause disinvestment; why would a company sink costs into providing regular service if competing companies can skim off their business? The authors compared the situation to an economy free of patent protection, which would prevent companies from inventing anything for fear that their idea would be copied.

The solution to this, advanced in part 3, was for cities to establish curb rights. This could happen in many ways, but what the authors propose is, on given city blocks, have some curbside dedicated for scheduled bus service, and some for unscheduled common jitneys.

The government could bid the space to private leaseholders, who either use it for their own service or sublet it to other operators. Schedules, modes, and other management decisions could be made between operators and leaseholders based on market demand. In other cases, spaces besides just curbs could be leased, such as from restaurants that have excess parking space. The idea is to increase predictability, and the space that private transit can stop, unboard, reload and thus flourish.

Sadly, there’s been no policy shift in the 23 years since the publication of Curb Rights. Scarce urban curb space is still reserved for decidedly non-market uses: underpriced parking, public bus lanes, infrequently-used government service vehicles, etc. This means most private transit has no room or legal authority to exist. But a system of property rights over curbside space, traded on the open market, could be a foundation for private transit innovation, or even as a way to better speed up public transit.

It would give private modes operating room, and the predictability of knowing the space is, in fact, theirs, as long as they pay for it. The winner would be the consumer, whose life becomes more mobile and predictable once a flurry of transit operators are competing for their business.