Transport Pricing and Public-Private Partnerships

Roger Vickerman and Emil Evenhuis

Studies in Economics from School of Economics, University of Kent

Abstract: Public-Private Partnerships have become a favoured way of introducing private capital into transport projects whilst maintaining an element of public interest. This paper considers the potential conflicts that might arise between the freedom of the private operator within a PPP and other elements of the public sector’s transport policy. Specifically it tackles the question of the problems that might arise when the public sector wishes to implement a type of price regulation, for example SMC Pricing, which might appear to limit the freedom of the private interest to maximise its value from the PPP according to the contract. The paper demonstrates theoretically the potential inconsistencies between such policies and suggest ways in which they may be overcome. We first briefly discuss Public-Private Partnerships in transport: what are the defining characteristics and what are the main types that exist in the different modes of transport? Next we consider the economics of Public-Private Partnerships, in particular from the viewpoint of incentives. Subsequently we identify and examine the issues that arise when Social Marginal Cost Pricing is to be incorporated in PPPs as a regulation with regard to pricing in the transport sector. Lastly, we investigate the possibilities of resolving these issues.

Keywords: Public-private partnerships; Social Marginal Cost Pricing; Incentives; Contracts; EU Transport Policy (search for similar items in EconPapers)
JEL-codes: L14 L33 L51 L91 R48 (search for similar items in EconPapers)
Date: 2010-04
New Economics Papers: this item is included in nep-cta, nep-ppm and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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