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Public Policies and Investment in Network Infrastructure

Author

Listed:
  • Douglas Sutherland

    (OECD)

  • Sónia Araújo
  • Balázs Égert
  • Tomasz Kozluk

Abstract

How can public policy influence investment in infrastructure in network industries? Network industries rely mainly on fixed networks to deliver services, with investment being lumpy and largely irreversible. As a result, public policies – such as public provision, the introduction of competition and the regulatory environment – can potentially have an important impact on investment behaviour, with the net effect depending on the extent that policies boost socially-productive investment or reduce inefficient investment. Drawing on responses to a unique questionnaire assessing public policy in the network sectors, the information in this paper presents a systematic picture of relevant policies in place across OECD countries. Econometric analysis – both at the sectoral and firm level – finds that public policies can have significant quantitative effects. In particular, the introduction of competitive pressures through the reduction of barriers to entry and the combination of regulator independence and incentive regulation can promote investment in the sector.

Suggested Citation

  • Douglas Sutherland & Sónia Araújo & Balázs Égert & Tomasz Kozluk, 2011. "Public Policies and Investment in Network Infrastructure," OECD Journal: Economic Studies, OECD Publishing, vol. 2011(1), pages 1-23.
    • Handle: RePEc:oec:ecokac:5kg51mlvk6r6
    DOI: 10.1787/eco_studies-2011-5kg51mlvk6r6
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    Citations

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    Cited by:

    1. Annabelle Mourougane & Jarmila Botev & Jean-Marc Fournier & Nigel Pain & Elena Rusticelli, 2016. "Can an Increase in Public Investment Sustainably Lift Economic Growth?," OECD Economics Department Working Papers 1351, OECD Publishing.
    2. Jonas Frank & Jorge Martinez-Vazquez, 2014. "Decentralization And Infrastructure: From Gaps To Solutions," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1405, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    3. Luiz de Mello & Douglas Sutherland, 2014. "Financing Infrastructure," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1409, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    4. Goran Sumkoski, 2016. "Are Institutions Conducive to Better Regulatory Environment in Infrastructure?," Competition and Regulation in Network Industries, , vol. 17(1), pages 55-77, March.

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