Transaction costs. Toll collectors get paid shitloads of money. You also pay a cost in lost time. If you get paid $50/hour and spend 5 minutes a day stuck at a toll plaza, you're wasting over $4 in time daily, which is often 4 times the monetary cost of the toll. Over a work-year, you'd spend nearly $1400 in lost time while waiting for tolls.
Maybe competition between roads would reduce the time spent at tolls. Also, presumably, unmanned toll booths would be used.
You may currently be spending more than $1400 to the government to pay for government roads. With competitive incentives in road placement and size, you might save more than enough time to offset the transaction costs.
Until the development of electronic transponders, there was a physical limit to how quickly you can collect tolls. It may be somewhat practical now that you have drive-through tollbooths, but there are a bunch of other problems it creates. For example:
Roads are a high-fixed-cost-low-variable-cost industry. I posted on these at Reddit - http://reddit.com/info/2fquz/comments/c2fttk. Everything that's wrong with airlines will go wrong with roads, and more. I suspect that you'll see massive overinvestment in roads as road companies try to capture market share, then the huge number of intersections (all toll, remember?) will reduce driving efficiency.
Free markets solve a lot of things, but they don't solve everything. There's no magic wand that makes them more efficient than a public solution. There are, however, a series of incentives and information-transmission mechanisms that usually give a free-market operator an information advantage over a public operator, hence letting them produce more efficiently. If the incentives point in the wrong direction, though, you get less efficient production.
You seem to be asserting that consumers are not better off with the airlines deregulated. Although I hate air travel and everyone likes to complain about it, I don't think you can argue that, as government has been removed from airline regulation, air travel has become vastly more cheaper and available to more people and that it is possible to reach many more locations by plane.
Similarly for another high fixed cost industry which you cite - telecommunications.
Free markets might not solve everything, but they're almost always better than the alternatives. As examples of the alternatives, consider the postal service, government-run schools, Medicare and welfare.
The governments subsidize airports through enormous amounts of land close to cities at below market rates. Without this intervention, airfare would be much more expensive. Do you think we would be better off if airports would have had to purchase their land on a true free market or is it good for a government to give airports cheap land?
It's hard to know. Presumably the system would look different today if the government had not distorted it in that way. Perhaps if market incentives were allowed to operate instead of the land being taken, we would all be flying around in the jet cars we expected.
You sound so sure. You don't think if the enormous amounts of subsidies the government had spent on airports had instead been allowed to flow to alternative transportation modes or energy research, things might be different?
OK, it is certainly true that things would be different in a better way if our government would spend a sizable portion of the taxbase on energy research instead of wasting it an utterly insane manner.
There don't have to be toll booths. If you think that's a bad idea, why assume it would have to be used?
Another option is a monthly subscription fee for unlimited access to all roads a company owns. If there are a small number of large companies this might be convenient. And don't complain about fear of monopoly -- the alternative is a total government monopoly.
There are various possible ways the road use for subscribers only might be enforced. Offhand, none sound especially convenient. But they all sound better than the status quo: all people in the area are counted as "subscribers", even if they don't own a car, and are all billed, and this is backed up with guns. That's worse than any of the non-ideal enforcement mechanisms I can imagine. And while it may save a bit on transaction costs, it does that by not even trying to differentiate a subscriber from a non-subscriber.
How do you collect the money if there are no toll booths? Subsidize the private corporation by having police stop people without them?
You don't seem to be considering a couple of things:
The "backed up by guns" (if you want to have a serious discussion, these sorts of libertarian cliches could perhaps be checked at the door) tax funded roads have benefits that extend beyond the road users. "Externalities" as it were, in terms of lower prices for goods that are easily and quickly shipped to the area, competition for other modes of transportation, and perhaps jobs in sectors like tourism.
If, ignoring the externalities, you wish to more directly attach the costs to the people utilizing the roads, you could raise gas taxes. Of course, that has its own positive and negative aspects, and winners and losers.
The real world is tremendously complicated, and I don't think it's really possible to predict everything. However, I don't think that means that you can simply ignore some of the more interesting facets of economics and say "errr, just let the market take care of it" - it's just too simplistic.
