Economics at your fingertips  

Welfare costs of coordinated infrastructure investments: the case of competing transport modes

Richard Meade and Arthur Grimes ()

New Zealand Economic Papers, 2017, vol. 51, issue 2, 109-121

Abstract: Infrastructure investments such as in rail and road networks are often undertaken by different parties that have differing degrees of vertical integration into downstream rolling stock (i.e. train and truck) investments. We analyse the impacts on freight transport and welfare outcomes of different institutional approaches to investment coordination across multiple freight modes (rail and road) in the presence of upstream and downstream cost-reducing investments in each mode. We show that welfare is reduced when a profit-maximising transport infrastructure investor correctly anticipates the advent of a future competing infrastructure. This is because myopically failing to anticipate future competition results in welfare-enhancing over-investment. We further show that presciently anticipating inter-modal competition is not solely responsible for reduced welfare, with additional vertical and horizontal coordination issues also at work. Our model can be applied to a range of applications that deal with multiple competing infrastructure investments.

Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from

Access Statistics for this article

New Zealand Economic Papers is currently edited by Gail Pacheco

More articles in New Zealand Economic Papers from Taylor & Francis Journals
Bibliographic data for series maintained by ().

Page updated 2019-07-21
Handle: RePEc:taf:nzecpp:v:51:y:2017:i:2:p:109-121