High Tech Development in Transportation-Two Cheers for the Market System 871535
The paper suggests that market failure to provide required transport equipment may be due to inadequate information, an overly static market, or to insufficient funds.
Accurate estimation of rates of return to supplier or operator is impeded by “technological risk” -performance may fall short of expectations, “cost risk” - costs may overshoot estimates, “gaming risk” -after a decision, those by others may affect the outcome, “misinformation risk” and “product timing risk” -unforeseeable market changes may destroy profitability.
The paper analyzes the extent to which such projects as Advanced Train Control Systems can reduce misinformation, technological and gaming risks and isolate operators from cost overruns. All risks vary as technologies advance from one “plateau” to another. The development of global markets offers the means, not only of obtaining the best equipment at least cost, but also of maximizing purchase volume.