Topic: 5. Infrastructure

A complete indexing and article service is available free from 1967 to 2000

The Optimal Timing of Infrastructure Investment

This paper looks at the differences between the private firm and the public planner in timing investment in projects involving large sunk costs in growing markets. It shows that competition in the private sector will drive firms to invest earlier than the socially preferred date whilst a low ratio of private (producer) to public (producer plus consumer) benefits will cause them to delay relative to the socially preferred date. The paper looks at policy instruments for altering the private sector’s timing decision.

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Privatised transport Infrastructure and Incentives to Invest

The paper examines arguments which suggest that the investment plans of the UK’s nationalised industries before the end of the 1970s were inadequately constrained by the control mechanisms then in place but the newly privatised utilities subject to price cap regulation have inadequate incentives to invest. Comparison of the likely social costs of underinvestment and overinvestment suggest that the former will generally be higher under existing regulatory mechanisms. The paper concludes by suggesting solutions to the dilemma posed.

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The Suez Canal Project to Accommodate Super-Tankers

The projected deepening and widening of the Suez Canal would be economically beneficial both to Egypt and to the users (including the oil-producing countries, the oil companies, the shipping industry and the consuming countries). The authors reach this conclusion after reviewing the estimated cost in relation to the quantities of Middle East oil going to northwestern and to southern Europe, comparative costs of transporting it by the Cape route and by existing and projected pipelines, and revenue under possible new toll systems.

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Selecting an Optimal traffic Network

The author explains and compares various methods for solving the problem set out in her first sentence: “given a list of possible development projects, to select that combination which provides the best traffic network, evaluated in terms of given criteria”.

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Commercial Funding of transport Infrastructure. Lessons from Some Australian Cases

The study analyses the institutional arrangements for: (1) private participation in the new Sydney Harbour Tunnel, and (2) the provision of new terminals at minor airports operated by a public-sector corporation. Commercial objectives probably secure efficient management of construction, but otherwise reap few efficiency benefits. When there are tight constraints on government budgets, commercial funding mechanisms make it easier for governments to promote their favoured schemes.

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The Economics of Tolled Road Crossings

The authors examine the different practices adopted by the USA and the UK in levying tolls on transport infrastructure. Both diverge from economic theory. The British treatment of outstanding debt is found to be in need of reform.

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