IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/445.html
   My bibliography  Save this paper

Pricing, cost recovery, and production efficiency in transport : a critique

Author

Listed:
  • Kranton, Rachel E.

Abstract

The purpose of this paper is to assess the efficacy of optimal pricing formulas for pricing and cost recovery and to develop a general framework within which to analyze the performance of public transport. Five sources of inefficiency in public transport are discussed: (a) the goals of the enterprise or the regulation of its operations; (b) the structure of the output market; (c) the control mechanism between government and the enterprise; (c) the managerial incentive structure; and (d) the conditions of employment. Even when public enterprises are bent on maximizing consumer welfare, costs are not necessarily minimized. Lack of competition may also exacerbate the problem of asymmetric information between owners and managers. Owners of public firms are unlikely to exert pressure on public enterprises to operate efficiently. And public firms may be protected from insolvency by"soft"budget constraints.

Suggested Citation

  • Kranton, Rachel E., 1990. "Pricing, cost recovery, and production efficiency in transport : a critique," Policy Research Working Paper Series 445, The World Bank.
  • Handle: RePEc:wbk:wbrwps:445
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/1990/06/01/000009265_3960929171132/Rendered/PDF/multi_page.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. B. Caillaud & R. Guesnerie & P. Rey & J. Tirole, 1988. "Government Intervention in Production and Incentives Theory: A Review of Recent Contributions," RAND Journal of Economics, The RAND Corporation, vol. 19(1), pages 1-26, Spring.
    2. Bos, Dieter, 1985. "Public sector pricing," Handbook of Public Economics,in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 1, chapter 3, pages 129-211 Elsevier.
    3. Yellen, Janet L, 1984. "Efficiency Wage Models of Unemployment," American Economic Review, American Economic Association, vol. 74(2), pages 200-205, May.
    4. Laffont, Jean-Jacques & Tirole, Jean, 1986. "Using Cost Observation to Regulate Firms," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 614-641, June.
    5. Nellis, John R., 1988. "Contract plans and public enterprise performance," Policy Research Working Paper Series 118, The World Bank.
    6. De Alessi, Louis, 1974. "Managerial Tenure under Private and Government Ownership in the Electric Power Industry," Journal of Political Economy, University of Chicago Press, vol. 82(3), pages 645-653, May/June.
    7. Lindauer, David L., 1988. "Government pay and employment policies and government performance in developing economies," Policy Research Working Paper Series 42, The World Bank.
    8. Baumol, William J & Bradford, David F, 1970. "Optimal Departures from Marginal Cost Pricing," American Economic Review, American Economic Association, vol. 60(3), pages 265-283, June.
    9. Kim, Moshe & Spiegel, Menahem, 1987. "The effects of lump-sum subsidies on the structure of production and productivity in regulated industries," Journal of Public Economics, Elsevier, vol. 34(1), pages 105-119, October.
    10. Galenson, Alice, 1989. "Labor redundancy in the transport sector," Policy Research Working Paper Series 158, The World Bank.
    11. Heggie, Ian G. & Quick, Michael, 1990. "A framework for analyzing financial performance of the transport sector," Policy Research Working Paper Series 356, The World Bank.
    12. John Vickers & George Yarrow, 1988. "Privatization: An Economic Analysis," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262720116, January.
    13. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    14. Rees, Ray, 1984. "The Public Enterprise Game," Economic Journal, Royal Economic Society, vol. 94(376a), pages 109-123, Supplemen.
    15. Bos, Dieter & Peters, Wolfgang, 1988. "Privatization, internal control, and internal regulation," Journal of Public Economics, Elsevier, vol. 36(2), pages 231-258, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Prud'homme, Remy & DEC, 1994. "On the dangers of decentralization," Policy Research Working Paper Series 1252, The World Bank.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:445. 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: (Roula I. Yazigi). General contact details of provider: http://edirc.repec.org/data/dvewbus.html .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.