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Ivaldi, Marc
and Mccullough, Gerard J.
(2010)
Welfare Tradeoffs in U.S. Rail Mergers.
TSE Working Paper, n. 10-196
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Abstract
The renegotiation of regulatory contracts is known to prevent regulators from achieving the
full commitment efficient outcome in dynamic contexts. However, assessing the cost of such
renegotiation remains an open issue from an empirical viewpoint. To address this question,
we fit a structural principal-agent model with renegotiation on a set of urban transport service
contracts. The model captures two important features of the industry. First, only two types
of contracts are used in practice (fixed-price and cost-plus). Second, subsidies increase over
time. We compare a scenario with renegotiation and a hypothetical situation with full commitment.
We conclude that the welfare gains from improving commitment would be significant
but would accrue mostly to operators.
| Item Type: | Monograph (Working Paper) |
|---|---|
| Language: | English |
| Date: | 8 September 2010 |
| JEL Classification: | L11 - Production, Pricing, and Market Structure; Size Distribution of Firms L13 - Oligopoly and Other Imperfect Markets L41 - Monopolization; Horizontal Anticompetitive Practices L92 - Railroads and Other Surface Transportation - Autos, Buses, Trucks, and Water Carriers; Ports |
| Subjects: | B- ECONOMIE ET FINANCE |
| Divisions: | TSE-R (Toulouse) |
| Site: | UT1 |
| Date Deposited: | 18 Jan 2012 06:02 |
| Last Modified: | 02 Apr 2021 15:36 |
| OAI Identifier: | oai:tse-fr.eu:23459 |
| URI: | https://publications.ut-capitole.fr/id/eprint/3471 |
