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Joint Provision of International Transport Infrastructure

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  • Se-il Mun

Abstract

This paper considers the following scheme for the joint provision of an international transport infrastructure: two countries jointly establish an operator for the infrastructure who is then responsible for collecting the user charges. The costs of the infrastructure investment are covered by nancial contributions from the two countries, and the revenue from the user charges is distributed according to the share of contribution. The governments of the two countries choose the contribution that maximizes their national welfare. Assuming that the infrastructure use is non-rival, we show that nancing the infrastructure with revenue from user charges is better than nancing with tax revenue. We extend the analysis by incorporating congestion in infrastructure use. It is shown that independent decisions on contributions by two governments attain the rst-best optimum when the operator sets the user charge such that the toll revenue just covers the cost of the investment. We further examine the conditions under which joint provision is realized at Nash equilibrium.

Suggested Citation

  • Se-il Mun, 2016. "Joint Provision of International Transport Infrastructure," Discussion papers e-15-015, Graduate School of Economics , Kyoto University.
    • Handle: RePEc:kue:epaper:e-15-015
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    References listed on IDEAS

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    More about this item

    Keywords

    international transport infrastructure; joint provision; congestion; self- nancing;
    All these keywords.

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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