IDEAS home Printed from https://ideas.repec.org/a/eee/ecotra/v19y2019ic4.html
   My bibliography  Save this article

Joint provision of transportation infrastructure

Author

Listed:
  • Mun, Se-il

Abstract

This paper considers the following scheme for the joint provision of transportation infrastructure: two regions jointly establish an operator for the infrastructure who is then responsible for collecting the user charges. The two regions make financial contributions to cover the costs of the infrastructure investment, and the revenue from user charges is distributed according to the share of contribution. The governments of the two regions choose the contribution that maximizes their regional welfare. Assuming that the infrastructure use is non-rival, we show that financing the infrastructure with revenue from user charges is better than financing it with tax revenue. We extend the analysis by incorporating congestion in infrastructure use. We show that independent decisions on contributions by two governments attain the first-best optimum when the operator sets the user charge such that the toll revenue just covers the cost of the investment. We further examine the conditions under which two governments participate in joint provision at Nash equilibrium.

Suggested Citation

  • Mun, Se-il, 2019. "Joint provision of transportation infrastructure," Economics of Transportation, Elsevier, vol. 19(C), pages 1-1.
    • Handle: RePEc:eee:ecotra:v:19:y:2019:i:c:4
    DOI: 10.1016/j.ecotra.2019.06.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S2212012218300376
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ecotra.2019.06.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Furusawa, Taiji & ,, 2011. "Contributing or free-riding? Voluntary participation in a public good economy," Theoretical Economics, Econometric Society, vol. 6(2), May.
    2. Cornes,Richard & Sandler,Todd, 1996. "The Theory of Externalities, Public Goods, and Club Goods," Cambridge Books, Cambridge University Press, number 9780521477185.
    3. Oakland, William H, 1974. "Public Goods, Perfect Competition, and Underproduction," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 927-939, Sept./Oct.
    4. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
    5. Eric W. Bond, 2006. "Transportation Infrastructure Investments And Trade Liberalization," The Japanese Economic Review, Japanese Economic Association, vol. 57(4), pages 483-500, December.
    6. Bruno Borger & Stef Proost, 2016. "The political economy of pricing and capacity decisions for congestible local public goods in a federal state," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(5), pages 934-959, October.
    7. Xiao, Yibin & Fu, Xiaowen & Zhang, Anming, 2016. "Airport capacity choice under airport-airline vertical arrangements," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 298-309.
    8. De Borger, Bruno & Proost, Stef, 2012. "Transport policy competition between governments: A selective survey of the literature," Economics of Transportation, Elsevier, vol. 1(1), pages 35-48.
    9. Brito, Dagobert L & Oakland, William H, 1980. "On the Monopolistic Provision of Excludable Public Goods," American Economic Review, American Economic Association, vol. 70(4), pages 691-704, September.
    10. John Morgan, 2000. "Financing Public Goods by Means of Lotteries," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(4), pages 761-784.
    11. James Andreoni, 1998. "Toward a Theory of Charitable Fund-Raising," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1186-1213, December.
    12. Mun, Se-il & Nakagawa, Shintaro, 2010. "Pricing and investment of cross-border transport infrastructure," Regional Science and Urban Economics, Elsevier, vol. 40(4), pages 228-240, July.
    13. Jan K. Brueckner, 2015. "Decentralized Road Investment and Pricing in a Congested, Multi-Jurisdictional City: Efficiency With Spillovers," National Tax Journal, National Tax Association;National Tax Journal, vol. 68(3S), pages 839-854, September.
    14. Zubrickas, Robertas, 2014. "The provision point mechanism with refund bonuses," Journal of Public Economics, Elsevier, vol. 120(C), pages 231-234.
    15. Saijo, Tatsuyoshi & Yamato, Takehiko, 1999. "A Voluntary Participation Game with a Non-excludable Public Good," Journal of Economic Theory, Elsevier, vol. 84(2), pages 227-242, February.
    16. Czerny, Achim & Höffler, Felix & Mun, Se-il, 2014. "Hub port competition and welfare effects of strategic privatization," Economics of Transportation, Elsevier, vol. 3(3), pages 211-220.
    17. Falkinger, Josef, 1996. "Efficient private provision of public goods by rewarding deviations from average," Journal of Public Economics, Elsevier, vol. 62(3), pages 413-422, November.
    18. Verhoef, Erik T., 2017. "Cost recovery of congested infrastructure under market power," Journal of Urban Economics, Elsevier, vol. 101(C), pages 45-56.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Li, Zhi-Chun & Ma, Jia-Chun, 2021. "Investing in inter-city and/or intra-city rail lines? A general equilibrium analysis for a two-city system," Transport Policy, Elsevier, vol. 108(C), pages 59-82.
    2. Zheng, Shiyuan & Chen, Xirong & Dong, Kangyin & Wang, Kun & Fu, Xiaowen, 2022. "Joint investment on resilience of cross-country transport infrastructure," Transportation Research Part A: Policy and Practice, Elsevier, vol. 166(C), pages 406-423.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Se-il Mun, 2016. "Joint Provision of International Transport Infrastructure," Discussion papers e-15-015, Graduate School of Economics , Kyoto University.
    2. Feder, Christophe, 2018. "Decentralization and spillovers: A new role for transportation infrastructure," Economics of Transportation, Elsevier, vol. 13(C), pages 36-47.
    3. Noriaki Matsushima & Ryusuke Shinohara, 2015. "The efficiency of monopolistic provision of public goods through simultaneous bilateral bargaining," ISER Discussion Paper 0948, Institute of Social and Economic Research, Osaka University.
    4. Paul Pecorino, 2015. "Olson’s Logic of Collective Action at fifty," Public Choice, Springer, vol. 162(3), pages 243-262, March.
    5. Liu, Tracy Xiao & Lu, Jingfeng & Wang, Zhewei, 2022. "Efficient public good provision by lotteries with nonlinear pricing," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 680-698.
    6. Cason, Timothy N. & Tabarrok, Alex & Zubrickas, Robertas, 2021. "Early refund bonuses increase successful crowdfunding," Games and Economic Behavior, Elsevier, vol. 129(C), pages 78-95.
    7. Paskalev, Zdravko & Yildirim, Huseyin, 2017. "A theory of outsourced fundraising: Why dollars turn into “Pennies for Charity”," Journal of Economic Behavior & Organization, Elsevier, vol. 137(C), pages 1-18.
    8. Hines Jr., James R., 2000. "What is benefit taxation?," Journal of Public Economics, Elsevier, vol. 75(3), pages 483-492, March.
    9. Wolfgang Buchholz & Richard Cornes & Dirk Rübbelke, 2011. "Matching as a Cure for Underprovision of Voluntary Public Good Supply: Analysis and an Example," ANU Working Papers in Economics and Econometrics 2011-541, Australian National University, College of Business and Economics, School of Economics.
    10. Wolfgang Buchholz & Richard Cornes & Dirk T. G. Rübbelke, 2009. "Existence and Warr Neutrality for Matching Equilibria in a Public Good Economy: An Aggregative Game Approach," CESifo Working Paper Series 2884, CESifo.
    11. Lange, Andreas & List, John A. & Price, Michael K., 2007. "A fundraising mechanism inspired by historical tontines: Theory and experimental evidence," Journal of Public Economics, Elsevier, vol. 91(9), pages 1750-1782, September.
    12. Verhoef, Erik T., 2017. "Cost recovery of congested infrastructure under market power," Journal of Urban Economics, Elsevier, vol. 101(C), pages 45-56.
    13. Karen Pittel & Dirk T.G. Rübbelke, 2006. "Private provision of public goods: incentives for donations," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 33(6), pages 497-519, November.
    14. Cason, Timothy N. & Zubrickas, Robertas, 2019. "Donation-based crowdfunding with refund bonuses," European Economic Review, Elsevier, vol. 119(C), pages 452-471.
    15. Lorz, Oliver, 2020. "Investment in trade facilitating infrastructure: A political-economy analysis," European Journal of Political Economy, Elsevier, vol. 65(C).
    16. Takuma Wakayama & Takehiko Yamato, 2023. "Comparison of the voluntary contribution and Pareto-efficient mechanisms under voluntary participation," International Journal of Game Theory, Springer;Game Theory Society, vol. 52(2), pages 517-553, June.
    17. Huseyin Yildirim & Alvaro Name Correa, 2011. "A Theory of Charitable Fund-Raising with Costly Solicitations," Levine's Working Paper Archive 786969000000000222, David K. Levine.
    18. Buchholz, Wolfgang & Cornes, Richard & Rübbelke, Dirk, 2011. "Interior matching equilibria in a public good economy: An aggregative game approach," Journal of Public Economics, Elsevier, vol. 95(7), pages 639-645.
    19. Wichman, Casey J., 2016. "Incentives, green preferences, and private provision of impure public goods," Journal of Environmental Economics and Management, Elsevier, vol. 79(C), pages 208-220.
    20. Matsushima, Noriaki & Shinohara, Ryusuke, 2019. "Pre-negotiation commitment and internalization in public good provision through bilateral negotiations," Journal of Public Economics, Elsevier, vol. 175(C), pages 84-93.

    More about this item

    Keywords

    Transportation infrastructure; Joint provision; Congestion; Self-financing;
    All these keywords.

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecotra:v:19:y:2019:i:c:4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecotra .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.