Joint Provision of International Transport Infrastructure

Se-il Mun

Discussion papers from Graduate School of Economics , Kyoto University

Abstract: This paper considers the following scheme for the joint provision of an international transport infrastructure: two countries jointly establish an operator for the infrastructure who is then responsible for collecting the user charges. The costs of the infrastructure investment are covered by nancial contributions from the two countries, and the revenue from the user charges is distributed according to the share of contribution. The governments of the two countries choose the contribution that maximizes their national welfare. Assuming that the infrastructure use is non-rival, we show that nancing the infrastructure with revenue from user charges is better than nancing with tax revenue. We extend the analysis by incorporating congestion in infrastructure use. It is shown that independent decisions on contributions by two governments attain the rst-best optimum when the operator sets the user charge such that the toll revenue just covers the cost of the investment. We further examine the conditions under which joint provision is realized at Nash equilibrium.

Keywords: international transport infrastructure; joint provision; congestion; self- nancing (search for similar items in EconPapers)
JEL-codes: H54 L91 R41 R48 (search for similar items in EconPapers)
Pages: 21
Date: 2016-03
New Economics Papers: this item is included in nep-reg and nep-tre
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Persistent link: https://EconPapers.repec.org/RePEc:kue:epaper:e-15-015

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