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Subsidiarity and Transport Policy in Europe: What EU-Subsidies Do We Need for the TEN?

In: Subsidiarity and Economic Reform in Europe

Author

Listed:
  • Bruno Borger

    (University of Antwerp)

  • Stef Proost

    (Catholic University of Leuven)

Abstract

Why and how a supra-national government should intervene in the local supply of public goods, such as transport infrastructure, is a question that has received a lot of attention in the economic literature. This chapter studies the advantages and disadvantages of supra-national intervention in the provision of transport infrastructure, and how this intervention interacts with the use of pricing instruments for the use of the infrastructure. We review the basic economics underlying the pricing and investment decisions by Member States and the arguments for supra-national intervention. This allows us to draw some policy conclusion for EU intervention in the capacity provision and pricing of the Trans-European Networks (TEN-T). We interpret these networks mainly as serial transport corridors, and we study the outcomes of pricing and investment decisions for the network when different Member States make individual decisions on capacity and user charges on the links of the network they control. These outcomes are compared with efficient policies from the European perspective. Finally, we show the desirability of EU-intervention in the financing of the TEN, and we propose simple subsidy rules the EU can follow in deciding on subsidy levels for particular projects.

Suggested Citation

  • Bruno Borger & Stef Proost, 2008. "Subsidiarity and Transport Policy in Europe: What EU-Subsidies Do We Need for the TEN?," Springer Books, in: George Gelauff & Isabel Grilo & Arjan Lejour (ed.), Subsidiarity and Economic Reform in Europe, chapter 19, pages 325-341, Springer.
    • Handle: RePEc:spr:sprchp:978-3-540-77264-4_19
    DOI: 10.1007/978-3-540-77264-4_19
    as

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