Advanced Search
MyIDEAS: Login to save this article or follow this journal

Infrastructure investment, the cost of capital, and regulation: an assessment


Author Info

  • Dieter Helm
Registered author(s):


    The paper considers the role of infrastructure in improving economic performance, and its comparative neglect relative to traditional macroeconomic and microeconomic policies. It explains why infrastructure matters, why Britain's infrastructure performance has been poor, and summarizes the scale of the challenge for the coming decade. Privatization, liberalization, and competition have focused on monopoly market failure and private incentives, but they have neglected the time inconsistency problem which confronts investors in networks with high fixed and sunk costs. The failure to commit which has characterized British approaches to infrastructure has been partially addressed through the creation of regulated asset bases (RABs), backed up by the duty on regulators to ensure that functions can be financed. The paper considers how the RABs can be developed to provide credible long-term contracts over a wide range of activities, and how the financial regulatory regime can complement this commitment, notably through the split cost of capital and the indexation of the cost of debt approaches. The paper concludes by setting out the building blocks of a credible regulatory framework for infrastructure, together with the impacts on reducing the cost of capital. The role of the State in reinforcing this commitment and the associated institutions are also set out. Copyright 2009, Oxford University Press.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Oxford University Press in its journal Oxford Review of Economic Policy.

    Volume (Year): 25 (2009)
    Issue (Month): 3 (Autumn)
    Pages: 307-326

    as in new window
    Handle: RePEc:oup:oxford:v:25:y:2009:i:3:p:307-326

    Contact details of provider:
    Web page:

    Related research



    No references listed on IDEAS
    You can help add them by filling out this form.


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

    Cited by:
    1. Tooraj Jamasb & Rabindra Nepal, 2014. "Issues and Options in the Economic Regulation of European Network Security," Discussion Papers Series 505, School of Economics, University of Queensland, Australia.
    2. Gert Brunekreeft, 2012. "On the role of international benchmarking of electricity Transmission System Operators facing significant investment requirements," Bremen Energy Working Papers 0012, Bremer Energie Institut.
    3. Rabindra, Nepal & Tooraj, Jamasb, 2013. "Caught Between Theory and Practice: Government, Market, and Regulatory Failure in Electricity Sector Reforms," SIRE Discussion Papers 2013-22, Scottish Institute for Research in Economics (SIRE).
    4. Arthur Henriot, 2013. "Financing investment in the European electricity transmission network: Consequences on long-term sustainability of the TSOs financial structure," RSCAS Working Papers 2013/27, European University Institute.


    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


    Access and download statistics


    When requesting a correction, please mention this item's handle: RePEc:oup:oxford:v:25:y:2009:i:3:p:307-326. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum).

    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 references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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