Some ideas:

1. Zoning. Maybe pay toliets are the NIMBY victims. Most people admit they
might be nice to have, but I can imagine businesses not wanting them
in front of their shop or street corner.

2. Most pay toilets sit on the street. I can also imagine them being a
victim of urban planning - city gov't types simply hate them because they
don't fit into their view of what cities should be like.

3. They aren't as profitable as you think because people can frequently
use quasi-public restrooms such as fast food places, hotels, gas stations,
etc. Ie, there are real competitors. 

Fabio


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