Impact of Regulation on Transport Infrastructure Capacity and Service Quality
AbstractThis paper investigates the impact of economic regulation on transport infrastructure capacity and service quality. We find that for a monopoly profit-maximising infrastructure provider, its capacity is the largest under cost-based regulation, which is followed by rate-of-return regulation, no regulation, and price-cap regulation. Furthermore, we show that service quality has the same order as capacity investments: it is the highest under cost-based regulation, then rate-of-return regulation, no regulation, and is the lowest under price-cap regulation. However, numerical examples reveal that price-cap regulation yields the highest social welfare. © 2012 LSE and the University of Bath
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Bibliographic InfoArticle provided by London School of Economics and University of Bath in its journal Journal of Transport Economics and Policy (JTEP).
Volume (Year): 46 (2012)
Issue (Month): 3 (September)
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Web page: http://www.bath.ac.uk/e-journals/jtep
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