Impact of Regulation on Transport Infrastructure Capacity and Service Quality
This 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
Volume (Year): 46 (2012)
Issue (Month): 3 (September)
|Contact details of provider:|| Web page: http://www.bath.ac.uk/e-journals/jtep|
When requesting a correction, please mention this item's handle: RePEc:tpe:jtecpo:v:46:y:2012:i:3:p:415-430. 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: (Christopher F. Baum)
If references are entirely missing, you can add them using this form.