Investment in Practice — Rail, Roads and Ports
Real world transport investment decisions have generally been somewhat uncertainly related to the possible theoretical criteria. There is little information, except what is contained in company reports and statements, about investment in the private sector. There is no reason to believe that the situation is different from that in other industries, however, and it seems likely that the underlying aim of private transport firms is to maximise producers’ surplus, though in some cases new investment may be motivated by the desire for growth for its own sake, and sales maximisation may be as important as profit maximisation. Investment policy has been by no means uniform in the public sector, but there has been a development over the past fifteen years from policies that were mainly politically determined, and that lacked any clear economic guidelines, to those that at least demand that there should be a satisfactory rate of return on invested capital. The development of public sector investment policy can be seen most clearly by studying the cases of investment in railways, road track and ports.
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