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We've all been asked this question before, and usualy our response is akin to, "I don't know, but the free market will come up with a solution." But I realized that we do have a real world example of how it might work. The Japanese railway systems are the fastest, most efficient and low cost method of transportation for the consumers in the world. Having been to Japan and used their train systems frequently, I cannot praise it enough. The trains are always on time, never more than 20 seconds off the estimated arrival time. The seat are heated in winter and the air conditioning is always comfortable in summer. The trains travel impecibly fast (Their bullet trains now go 350 mph) and there's always a train station around. Over crowding was not much of a problem once you get out of the Tokyo area, even the Yokohama area was very accomidating and spacious. And best of all? It was cheap! The taxi fee's and highway toll costs were ridiculously high and very unaffordable, the train systems were only a fraction of the cost and they went everywhere. The best part about all of this? The Japanese Train systems are all privately owned and runned by various companies. From Wikipedia: While it is true that a portion of their railways were created, owned and operated by the Japanese governement for until the 1900's, the Japanese governemnt failed on almost every fundamental level to keep the public transportation cost effective and working well for their citizens (sound familar?). By the 1964 the railways were bought out by various companies and by the 1980's it was completely privitized giving birth to the rapid increase of transportation technology that Japan is famous for today. These companies, working together in a joint effort, solved many of the common plagues of train systems, such as the loud 'booming' noise that would occur when a train would enter a station (solved by a redesign of the nose). They also increased safety standards. Since the privitization of the train systems in 1964, they have never had a derailment or a single death due to a train crash (suicides are a different story). It's very interesting how this is never mentioned.