Does Regulation and Institutional Design Matter for Infrastructure Sector Performance?
Article from: TDM 2 (2007), in Infrastructure Investment & Dispute Management
Introduction
This paper tests the impact of regulation of private infrastructure operators on sector performance, from three separate angles. The findings are that: (i) the quality of regulation is found to be a significant determinant of the divergence between the overall profitability of the concession and its corresponding hurdle rate-cost of capital, explaining around 20% of the variation. However, regulatory efforts seem to be more closely associated with keeping tariffs as low as possible for current consumers, than keeping profitability well aligned with hurdle rates of return.; (ii) ...