European Regional Science Association
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European Regional Science Association
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The abstract for paper number 217:
Barry Ubbels, Department of Spatial Economics, Free University Amsterdam, Amsterdam, The Netherlands, Erik Teodoor Verhoef, Free University Amsterdam, Amsterdam, The Netherlands
Public versus private involvement in road pricing
The provision of road infrastructure is characterised by large public involvement. It has been a highly regulated sector and hence price setting is often determined by policy and political objectives. However, private involvement in infrastructure provision is increasing. This paper focuses on the consequences of different ownership regimes for transport prices and economic efficiency. Theory reveals that governments, aiming for efficient prices (based on marginal costs), will in general not generate enough revenues to cover the large fixed costs. This is one of the reason for large public involvement as it is difficult to attract private investors. Prices may then be modified in various ways to enhance the infrastructure manager's revenue stream (e.g. Ramsey pricing). The paper ends with an analysis of the effects of various ownership (and pricing) regimes on the revenues and economic efficiency by using a small two-link network simulation model.
Unfortunately full paper has not been submitted.