The (never) ending story of the truck toll system – a contract theory view
Niels Krap
Wirtschaft im Wandel,
No. 11,
2005
Abstract
After long-lasting negotiations, representatives of the Federal Government and the consortium Toll Collect signed a 17,000 pages contract on 20 September, 2002. It was fixed that Toll Collect had to develop and afterwards operate a system for the automatic collection of a satellite-supported distance-based truck toll until the end of August 2003. However, technical difficulties in the development of the new system led to delays to an unexpected extent. In this article, it is examined whether the results of the renegotiations that followed were consistent to the economics of contract theory. It can be shown that both contracting parties were bound to the contractual relation, so that the preliminary termination of the contract by the Federal Minister of Transport on 17 February, 2004 became void by an agreement only few days later. Additionally, it could be identified that the contract set correct incentives for both parties, Federal Government and Toll Collect, and covered the possibility of efficient renegotiation.
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Quality of Service, Efficiency, and Scale in Network Industries: An Analysis of European Electricity Distribution
Christian Growitsch, Tooraj Jamasb, Michael Pollitt
IWH Discussion Papers,
No. 3,
2005
Abstract
Quality of service is of major economic significance in natural monopoly infrastructure industries and is increasingly addressed in regulatory schemes. However, this important aspect is generally not reflected in efficiency analysis of these industries. In this paper we present an efficiency analysis of electricity distribution networks using a sample of about 500 electricity distribution utilities from seven European countries. We apply the stochastic frontier analysis (SFA) method on multi-output translog input distance function models to estimate cost and scale efficiency with and without incorporating quality of service. We show that introducing the quality dimension into the analysis affects estimated efficiency significantly. In contrast to previous research, smaller utilities seem to indicate lower technical efficiency when incorporating quality. We also show that incorporating quality of service does not alter scale economy measures. Our results emphasise that quality of service should be an integrated part of efficiency analysis and incentive regulation regimes, as well as in the economic review of market concentration in regulated natural monopolies.
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