Ownership, Investment and Pricing of Transport and Communications Infrastructure

There is mounting concern in many countries about the quantity of transport and communications infrastructure available and the usefulness of what is provided after a period of relatively low maintenance expenditures. Specifically, attention has been focused upon the adequacy of the infrastructure to sustain future economic expansion and development. In many ways, however, remarkably little is known about the importance of transport and communications infrastructure provision in the initiation and simulation of economic development. The aim of this essay is to examine a particular, and indeed small, element of the topic. This concerns the extent to which the current pricing of transport and communications infrastructure in most high-income economies is sub-optimal both from an environmental perspective and from the point of view of more narrowly defined economic criteria. A limitation of much of the literature on infrastructure provision is that it assumes, almost automatically, that public provision is a necessary prerequisite for efficient investment and utilisation to be attained. An underlying theme of the argument presented here is that prices can indeed be inappropriate and investment need not be optimal and that this often stems at least as much from failures in the government process as it does from any notion that markets are failing. Indeed, it could well be argued that a rather more limited role for government in infrastructure provision might reduce some of the problems and lead to a more substantive provision of infrastructure.