Infrastructure Investment and Incentives with Supranational Funding
Public infrastructure investment is usually co-financed by supranational organizations. The selection of projects is supposed to be decided using the information provided by conventional cost-benefit analysis. Nevertheless, we show that the type of institutional design regarding the financing mechanism affects the incentives of national governments to reduce costs and increase revenues, affecting project selection, the infrastructure capacity, the choice of technology, and the type of contract used for the construction and operation of projects. With a total cost-plus financing mechanism there is no incentive in being efficient and the price charged for the use of the new infrastructure is zero, the market quantity excessive, and the level of supranational financing disproportionate. In contrast, with a sunk cost-plus financing mechanism social optimal pricing is always implemented, though there is no incentive in being efficient. Finally, with a fixed-price financing mechanism the maximal efficiency may be achieved, and the socially optimal pricing is always implemented.
(This abstract was borrowed from another version of this item.)
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.
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.
Volume (Year): 17 (2010)
Issue (Month): 3 (September)
|Contact details of provider:|| Web page: http://www.springer.com|
|Order Information:||Web: http://www.springer.com/economics/european+integration/journal/11300|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743.
- Jean Tirole & Jean-Jaques Laffont, 1985.
"Using Cost Observation to Regulate Firms,"
368, Massachusetts Institute of Technology (MIT), Department of Economics.
- Massimo Florio, 2005. "A ``European Consensus'' on the Growth Agenda? A Discussion of the Sapir Report," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 12(3), pages 411-431, December.
- Michela Cella & Massimo Florio, 2009. "Hierarchical contracting in grant decisions: ex-ante and ex-post evaluation in the context of the EURegional Policy," Working Papers 171, University of Milano-Bicocca, Department of Economics, revised Jun 2009.
- Dag Morten Dalen & Andres Gomez Lobo, 1996. "Regulation and incentive contracts: An empirical investigation of the Norwegian bus transport industry," IFS Working Papers W96/08, Institute for Fiscal Studies.
- Sobel, Russell S, 1998. "The Political Costs of Tax Increases and Expenditure Reductions: Evidence from State Legislative Turnover," Public Choice, Springer, vol. 96(1-2), pages 61-79, July.
- Natalia Zinovyeva & Manuel F. Bagues, 2010.
"Does gender matter for academic promotion? Evidence from a randomized natural experiment,"
- Zinovyeva, Natalia & Bagues, Manuel F., 2011. "Does Gender Matter for Academic Promotion? Evidence from a Randomized Natural Experiment," IZA Discussion Papers 5537, Institute for the Study of Labor (IZA).
- Philippe Gagnepain & Marc Ivaldi, 2002.
"Incentive Regulatory policies: The Case of Public Transit Systems in France,"
- Philippe Gagnepain & Marc Ivaldi, 2002. "Incentive Regulatory Policies: The Case of Public Transit Systems in France," RAND Journal of Economics, The RAND Corporation, vol. 33(4), pages 605-629, Winter.
- Gagnepain, Philippe & Ivaldi, Marc, 1999. "Incentive Regulatory Policies: The Case of Public Transit Systems in France," IDEI Working Papers 84, Institut d'Économie Industrielle (IDEI), Toulouse.
- Gagnepain, P. & Ivaldi, M., 1999. "Incentive Regulatory Policies: the Case of Public Transit Systems in France," Papers 99.515, Toulouse - GREMAQ.
- Eduardo M.R.A. Engel & Ronald D. Fischer & Alexander Galetovic, 1998.
"Least-Present-Value-of-Revenue Auctions and Highway Franchising,"
NBER Working Papers
6689, National Bureau of Economic Research, Inc.
- Eduardo M. R. A. Engel & Ronald D. Fischer & Alexander Galetovic, 2001. "Least-Present-Value-of-Revenue Auctions and Highway Franchising," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 993-1020, October.
- Eduardo Engel & Ronald Fischer & Alexander Galetovic, 1998. "Least-Present-Value-of-Revenue Auctions and Highway Franchising," Documentos de Trabajo 37, Centro de Economía Aplicada, Universidad de Chile.
- Michela Cella & Massimo Florio, 2007. "Hierarchical contracting in grant decisions: ex-ante and ex-post evaluation in the context of the EU Structural Funds," UNIMI - Research Papers in Economics, Business, and Statistics unimi-1059, Universitá degli Studi di Milano.
- Massimo FLORIO, 2006. "Multi-government cost-benefit analysis: shadow prices and incentives," Departmental Working Papers 2006-37, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
- Dalen, Dag Morten & Gomez-Lobo, Andres, 1997. "Estimating cost functions in regulated industries characterized by asymmetric information," European Economic Review, Elsevier, vol. 41(3-5), pages 935-942, April.
- Olsen, Trond E. & Osmundsen, Petter, 2005. "Sharing of endogenous risk in construction," Journal of Economic Behavior & Organization, Elsevier, vol. 58(4), pages 511-526, December.
- Sapir, Andre & Aghion, Philippe & Bertola, Giuseppe & Hellwig, Martin & Pisani-Ferry, Jean & Rosati, Dariusz & Vinals, Jose & Wallace, Helen, 2004.
"An Agenda for a Growing Europe: The Sapir Report,"
Oxford University Press, number 9780199271498, December.
- André Sapir & Philippe Aghion & Giuseppe Bertola & Martin Hellwig & Jean Pisani-Ferry & Bernard Lange & José Viñals & Helen Wallace & Marco Buti & Mario Nava & Peter Smith, 2004. "An agenda for a growing Europe: the Sapir report," ULB Institutional Repository 2013/8070, ULB -- Universite Libre de Bruxelles.
- Diego Puga, 2002.
"European regional policies in light of recent location theories,"
Journal of Economic Geography,
Oxford University Press, vol. 2(4), pages 373-406, October.
- Puga, Diego, 2001. "European Regional Policies in Light of Recent Location Theories," CEPR Discussion Papers 2767, C.E.P.R. Discussion Papers.
- Patrick Bajari & Steven Tadelis, 1999.
"Incentives versus Transaction Costs: A Theory of Procurement Contracts,"
99029, Stanford University, Department of Economics.
- Bajari, Patrick & Tadelis, Steven, 2001. "Incentives versus Transaction Costs: A Theory of Procurement Contracts," RAND Journal of Economics, The RAND Corporation, vol. 32(3), pages 387-407, Autumn.
- Robinson, James A & Torvik, Ragnar, 2002.
CEPR Discussion Papers
3459, C.E.P.R. Discussion Papers.
- Douglas Holtz-Eakin & Amy Ellen Schwartz, 1994.
"Infrastructure in a Structural Model of Economic Growth,"
NBER Working Papers
4824, National Bureau of Economic Research, Inc.
- Holtz-Eakin, Douglas & Schwartz, Amy Ellen, 1995. "Infrastructure in a structural model of economic growth," Regional Science and Urban Economics, Elsevier, vol. 25(2), pages 131-151, April.
- Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-1196, September.
- Nombela, Gustavo & de Rus, Ginés, 2004. "Flexible-term contracts for road franchising," Transportation Research Part A: Policy and Practice, Elsevier, vol. 38(3), pages 163-179, March.
When requesting a correction, please mention this item's handle: RePEc:spr:trstrv:v:17:y:2010:i:3:p:551-567. 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: (Sonal Shukla)or (Rebekah McClure)
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.