Transport Infrastructure - Adding Value

28 Pages Posted: 25 Jun 2013

Date Written: June 24, 2013


The paper is based on a lecture in the Beesley Series delivered at the Institute of Directors in London, in October 2012. Initially, it points out that transport infrastructure in the UK prior to the 20th century was planned and developed largely by private interests. Today private sector initiatives are restricted largely to air and seaports, the conduits for the nation’s trade in goods and services. The state is also inclined to intervene in this 'ports sector, which creates tensions between planned solutions and the market driven imperatives of commercial interests. State planning, notionally, is anchored by a welfare economics approach to evaluation but aspects of this are controversial and the paper argues that the current approach fails to adequately capture the competitive effects of investment. It then argues that whilst the private sector has been good at adding value by product differentiation, as illustrated by the airline industry, public sector assets by contrast are much more homogeneous in attributes, output and price. But there are opportunities for introducing variety and choice into the provision of publically provided transport infrastructure by market segmentation. The approach is illustrated by novel approaches in relation to capacity constrained commuter railways and motorways.

Keywords: investment, private sector, competition, evaluation, market segmentation, product differentiation, rail, road

JEL Classification: H43, L15, L92, N73, N74, R42

Suggested Citation

Starkie, David Nicholas, Transport Infrastructure - Adding Value (June 24, 2013). Available at SSRN: or

David Nicholas Starkie (Contact Author)

Case Associates ( email )

1 Heddon Street
London, W1B4BD
United Kingdom


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