Regulation, Transport and Regional Performance

ransport provision has a clear relationship to regional economic performance. Since transport is typically provided in a regulated market it is important to understand the ways in which the regulatory regimes can affect the efficient provision of transport. This paper explores ways in which the differential regulation of transport by regional authorities can affect the relative economic performance of regions. The basic hypothesis to be assessed is whether under competing regulatory regimes regions will tend to under-invest or over-invest in their transport provision. In this paper we develop a simple model of regulatory competition in a multi-agency world. The analysis demonstrates how regulatory conflicts can lead to inefficiencies which impact not just on the provision of transport services, but also on the potential wider benefits from transport, most notably labour market efficiency and productivity growth. In some cases this may result in regions over-investing in transport in an attempt to seek competitive advantage; in other cases they may under-invest seeking to benefit from spillovers from the level of investment in neighbouring regions. The paper concludes with a discussion of policy implications and alternatives.