INSIDE
By Stephen Metzger
Managing Director
Small Vehicle Resource, LLC
[email protected]
www.smallvehicleresource.com
THE GATED
COMMUNITY
Sometimes Government Can Play a
Positive Role in Market Development
O
ne of the interesting things that hap-
pened to me at my annual trek to the
PGA Show in Orlando was a conver-
sation with a successful golf car dealer from
Southern California. His name is Brian Rott
and he has now expanded into four deal-
erships, the latest in Burbank, a suburb of
sorts in Los Angeles.
Aside from the fact his business is prosper-
ous and growing, Brian has taken the lead
in proposing and lobbying for legislation
that could pave the way for major gains in
what I call the small, task-oriented vehicle
(STOV) market, including PTV-type vehi-
cles. As a result of our conversation, some
aspects of which are detailed below, it got
me to thinking about the general issue of
convergence between the private market
and government regulation. The latter,
which we in the private sector usually see as
restrictive and burdensome (which indeed
it is for the most part), can legitimately, at
times, address issues that the private sector
can’t or won’t.
Where government action could help
22
Take for example urban congestion. Ur-
ban congestion is caused by a multitude of
individuals needing to get from point A to
point B in a relatively constricted, or small
geographic area. The demand for road
space simply overwhelms the supply of such
roadways. To compound the problem, once
at point B there has to be a place to park.
WWW.GOLFCAROPTIONS.COM
This is something like plaque in the arteries.
Does the private market act to decongest the urban envi-
ronment; that is, raise the cost of urban travel and/or act in
some way to increase the supply of roadway and parking
space? The answer is, yes, to some extent. Afterall, if you
need to travel to the city, you are likely to do a cost-benefit
analysis, something like this: The benefit is I can get in my
car and travel directly to my destination. The cost is that
on a congested road I will have to leave quite early in order
to get to my destination at the appointed time. The extra
time involved in travel is lost productivity—and that usually
has a cost.
Now if the costs of time lost in productive activities were
sufficiently high, and affect enough people, there would be
a demand side adjustment diminishing urban congestion.
And on the supply side the market for public transporta-
tion would increase sufficiently to provide an alternative to
driving by individuals. (Note: “Public” transportation does
not mean publicly-owned. It means serving the public, and
a private company could do this.)
All of the above, so far, does take place. Yet, the needs for
individualized point-to-point transportation persist. An
economist would say this demand is highly inelastic, mean-
ing a percentage increase in cost, say 10%, results in a very
small percentage decrease in traffic, say 1%.
Congestion fees and other proposed remedies—will
they work?
If the private market is relatively ineffective is solving the
issue of urban congestion, what are the alternatives? Here
are some ideas with the strong likelihood of coming to
pass: