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Impact of Regulation on Transport Infrastructure Capacity and Service Quality

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  • Hangjun Yang
  • Anming Zhang

Abstract

This paper investigates the impact of economic regulation on transport infrastructure capacity and service quality. We find that for a monopoly profit-maximising infrastructure provider, its capacity is the largest under cost-based regulation, which is followed by rate-of-return regulation, no regulation, and price-cap regulation. Furthermore, we show that service quality has the same order as capacity investments: it is the highest under cost-based regulation, then rate-of-return regulation, no regulation, and is the lowest under price-cap regulation. However, numerical examples reveal that price-cap regulation yields the highest social welfare. © 2012 LSE and the University of Bath

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  • Hangjun Yang & Anming Zhang, 2012. "Impact of Regulation on Transport Infrastructure Capacity and Service Quality," Journal of Transport Economics and Policy, University of Bath, vol. 46(3), pages 415-430, September.
    • Handle: RePEc:tpe:jtecpo:v:46:y:2012:i:3:p:415-430
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    Citations

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    Cited by:

    1. Wang, Chunan & Wang, Xiaoyu, 2019. "Airport congestion delays and airline networks," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 122(C), pages 328-349.
    2. Zhang, Anming & Czerny, Achim I., 2012. "Airports and airlines economics and policy: An interpretive review of recent research," Economics of Transportation, Elsevier, vol. 1(1), pages 15-34.
    3. Czerny, Achim I. & Zhang, Hanxiang, 2020. "Rivalry between airport ancillary and city-center supplies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).
    4. Zhi-Chun Li & Dian Sheng, 2014. "Pavement rehabilitation scheduling and toll pricing under different regulatory regimes," Annals of Operations Research, Springer, vol. 217(1), pages 337-355, June.
    5. Xu, Meng & Grant-Muller, Susan & Gao, Ziyou, 2015. "Evolution and assessment of economic regulatory policies for expressway infrastructure in China," Transport Policy, Elsevier, vol. 41(C), pages 42-49.
    6. Wang, Chunan & Wang, Xiaoyu, 2019. "Why do airlines prefer multi-hub networks?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 124(C), pages 56-74.
    7. Balliauw, Matteo & Kort, Peter M. & Zhang, Anming, 2019. "Capacity investment decisions of two competing ports under uncertainty: A strategic real options approach," Transportation Research Part B: Methodological, Elsevier, vol. 122(C), pages 249-264.
    8. Yang, Hangjun & Fu, Xiaowen, 2015. "A comparison of price-cap and light-handed airport regulation with demand uncertainty," Transportation Research Part B: Methodological, Elsevier, vol. 73(C), pages 122-132.
    9. Shao, Jing & Yang, Hangjun & Xing, Xiaoqiang & Yang, Liu, 2016. "E-commerce and traffic congestion: An economic and policy analysis," Transportation Research Part B: Methodological, Elsevier, vol. 83(C), pages 91-103.
    10. Achim I. Czerny & Anmin Zhang, 2015. "Single-Till versus Dual-Till Regulation of Airports," Tinbergen Institute Discussion Papers 15-049/VIII, Tinbergen Institute.

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