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Journal of Regulatory Economics

, Volume 35, Issue 2, pp 201–221 | Cite as

Technology and incentive regulation in the Italian motorways industry

  • Luigi Benfratello
  • Alberto IozziEmail author
  • Paola Valbonesi
Original Article

Abstract

Making use of an original dataset containing information on 20 Italian motorways concessionaires over the 1992–2004 period, we study the technology prevailing in the motorways industry in Italy. We focus on the estimation of the technical progress for the years covered by our sample, and on the measurement of the economies of scale and density. We find that the industry has experienced significant technical progress and that there are sizeable economies of density and scale (at least up to a medium-large network size). These results provide valuable insights for regulatory purposes, notably for the definition of the optimal dimension of the network of a concessionaire and the correct setting of the X factor in the price cap formula, which is used to regulate the toll levels. We also control for the effects on the performance of the concessionaires due to the changes in the ownership structure and the regulatory regime, both introduced by the recent reform of the industry. We find that the productivity of the concessionaires has not increased with the adoption of a price cap regime, while it has benefited from the privatization process.

Keywords

Incentive regulation Technology Motorways industry 

JEL Classifications

L52 L92 

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Copyright information

© Springer Science+Business Media, LLC 2008

Authors and Affiliations

  • Luigi Benfratello
    • 1
    • 2
  • Alberto Iozzi
    • 3
    Email author
  • Paola Valbonesi
    • 4
  1. 1.Dip. di Scienze Economiche e Finanziarie “G. Prato”Università di TorinoTorinoItaly
  2. 2.Ceris-CNRMoncalieriItaly
  3. 3.Dip. SEFEMEQUniversità di Roma “Tor Vergata”RomeItaly
  4. 4.Dip. di EconomiaUniversità di PadovaPadovaItaly

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