[Baff]

Eran, can you expand on how certain public transportation systems are not natural monopolies? Eg, who else would compete with the London Underground? Buses and cars are a different sort of transportation altogether - like laptops and desktops.

The London Underground is not one underground. It is a network of underground railways each one built by private and independant companies.

The London Underground was natiionalised after the war.
All the railways were bought out and monopolised by the govt.

So in the example of the London Underground we can see that it was not a natural monopoly. It was a forced sale.
In its natural state it was a group of competing railway companies. They each built their respective parts of it.
The Northern line. The Cricle Line and so on. Each line built and operated by a different company, all built at different times.

The London Underground is not only in direct competition with bus providers, taxi cabs and cyclebanks..it's also in competion with motor car companies and bicycle companies.
And even (gasp) other rail companies. Overland for example.

But this is not all the competition it faces. It also faces competition for the investment money.
If someone else has a better idea for the same money (or if the idea is not a very valuable one).... it never gets built in the first place.
So it not only has to be a good idea, it has to be considered the best idea available at the time by the people who stand to lose from it.

Under a centralised government scheme, this same decision is made on everyones behalf by someone who doesn't stand to lose from it.
The same decision has not undergone anything like the same level of scrutinty it has if it has had to convince every single individual investor, and the investment made does not have the direct and explicit agreement of all those who stand to lose from it. It does not have the same moral authority.

As part of the government monopoly the London Underground now faces natural competition from a different source.
It must now compete for it's budget with upgrades for the sewer systems, or road systems, or new jet fighters, EU payments, winter fuel bonuses etc.

[Eran]

Eran, can you expand on how certain public transportation systems are not natural monopolies? Eg, who else would compete with the London Underground? Buses and cars are a different sort of transportation altogether - like laptops and desktops.

I can't believe I missed responding to this one - sorry.

In a privatised system, different lines may even belong to different companies, have long-term service agreements with local associations (of merchants, offices or residents) and collaborate with each other by allowing convenient transfers and a unified payment system.

To answer your question, the London Underground does experience competition from buses and taxis, as well as raised lines such as DLR.

Even as a coordinated monopoly, London Underground could only raise its prices so far before hurting its own profitability, as ridership declines with people transiting to other forms of transportation.

If other forms of transportation fail to compete, ultimately, London will start losing its appeal is a commercial hub, with people moving to smaller cities, better served in terms of their commute needs. Not all cities, btw, have subway transportation systems.

Finally, the excessive profits of a monopolised subway would prompt investment in alternatives such as a comprehensive raised-rail one.

[AFAIK]

If other forms of transportation fail to compete, ultimately, London will start losing its appeal is a commercial hub, with people moving to smaller cities, better served in terms of their commute needs. Not all cities, btw, have subway transportation systems.

Why is that considered to be preferable to interventions that allow the needs of all stakeholders to be incorporated into the running of the service?
When new transportation routes are constructed neighboring property and land owners benefit. What do libertarians make of this positive externality?

Finally, the excessive profits of a monopolised subway would prompt investment in alternatives such as a comprehensive raised-rail one.

But the elevated route wouldn't be a monopoly and investors wouldn't be able to recoup their investment unless they colluded with the operators of the current system (hypothetically).
Wouldn't there be a strong motive for competitors to form cartels?

[Eran]

Why is that considered to be preferable to interventions that allow the needs of all stakeholders to be incorporated into the running of the service?

This is a complicated question in the context of transitioning existing systems. That transition introduces complications that do not exist when "green-field" developments are considered.

For example, one could credibly argue that people alive today have an easement in the transportation arteries currently in use. Any privatisation of that system would have to take place in ways that respect those easements.

Similarly, Londoners may have access rights associated with the tube system. When the system is privatised, those rights would effectively protect stakeholder interests.

One example of how such process might proceed would be through hierarchical privatisation.

Imagine breaking London into neighbourhoods, with current property owners initially having equal (or proportionate area-based) share in each neighbourhood association. The association would become the owner (subject to out-of-area easements) of the formerly public spaces (streets, parks) within that neighbourhood.

Each neighbourhood association would also own a share in metropolitan-wide association taking ownership of metropolis-level infrastructure, including both the tube and arterial roads/rail lines.

The initial effect would be similar to that of current municipal government, but the dynamic of future development may be very different.

When new transportation routes are constructed neighboring property and land owners benefit. What do libertarians make of this positive externality?

Since nobody's property rights are harmed, libertarians have no problem with such externalities. In fact, positive externalities are ubiquitous
in society. That is precisely why we all benefit from living in society. If it weren't for positive externalities, the benefit of society would be greatly diminished.

Entrepreneurs constructing such new routes may, of course, attempt to capture some of those externalities by negotiating and reaching agreements with affected neighbourhood associations. In a conceivable negotiation, a neighbourhood may agree to pay the entrepreneur in exchange for placing a stop near their neighbourhood. Or merely grant free land for such station.

But the elevated route wouldn't be a monopoly and investors wouldn't be able to recoup their investment unless they colluded with the operators of the current system (hypothetically). Wouldn't there be a strong motive for competitors to form cartels?

Cartels are notoriously hard to maintain, absent government assistance.

Ultimately, it is in the interests of London's residents and property owners to have an affordable, efficient and attractive transportation system serving the city. Given their easements over transportation links, no ongoing exploitation can proceed.

In the example above, neighbourhood associations and, ultimately, the metropolitan association may negotiate a long-term service agreement with transportation operators.

[Kapanda]

The London Underground is not one underground. It is a network of underground railways each one built by private and independant companies.

The London Underground was natiionalised after the war.
All the railways were bought out and monopolised by the govt.

So in the example of the London Underground we can see that it was not a natural monopoly. It was a forced sale.

If I need to go from Holborn to Liverpool Street, it doesn't matter that a separate line offers competitive prices from Paddington to Baker Street.

[Eran]

If I need to go from Holborn to Liverpool Street, it doesn't matter that a separate line offers competitive prices from Paddington to Baker Street.

No, it doesn't. But if you plan to open a business that requires customer (or employees) to reach you, the cost and service of different providers will be a factor in choosing where to go.

And if you just need to go from Holborn to Liverpool street, alternative transportation modes will be available, including bus, taxi, underground and above-ground rail.

[Rothbardian]

Were railroads better before the government nationalized them? Did competing companies make their railways work together the way cell phone companies do today?

Hmmmmm