Forecasting the Demand for Privatized Transport : What Economic Regulators Should Know, and Why

Forecasting the Demand for Privatized Transport : What Economic Regulators Should Know, and Why

Forecasting has long been a challenge, and will remain so for the foreseeable future. But the analytical instruments and data processing capabilities available through the latest technology, and software, should allow much better forecasting than transport ministries, or regulatory agencies typically observe. Privatization brings new needs for demand forecasting. More attention is paid to risk under privatization, than when investments are publicly financed. And regulators must be able to judge traffic studies done by operators, and to learn what strategic behavior influenced these studies. Many governments, and regulators avoid good demand, modeling out of lack of conviction that theory, and models can do better than the "old hands" of the sector. This is dangerous when privatization changes the nature of business. For projects amounting to investments of $ 100-200 million, a cost of $ 100,000-200,000 is not a reason to reject a reasonable modeling effort. And some private forecasting firms are willing to sell guarantees, or insurance with their forecasts, to cover significant gaps between forecasts, and reality.

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Bibliographic Details
Main Authors: Trujillo, Lourdes, Quinet, Emile, Estache, Antonio
Format: Policy Research Working Paper biblioteca
Language:English
en_US
Published: World Bank, Washington, DC 2000-09
Subjects:ACCOUNTING, BENEFIT ANALYSIS, CONSUMER SURPLUS, CONSUMERS, COST MINIMIZATION, DEMAND ANALYSIS, DEMAND FORECASTING, DEVELOPED COUNTRIES, ECONOMISTS, ELASTICITY, EMPLOYMENT, EXCHANGE RATES, EXPENDITURES, EXPORTS, EXTERNALITIES, FIXED COSTS, FORECASTING MODELS, FORECASTING SERVICES, FORECASTS, INCOME, INCOME EFFECT, INCOME EFFECTS, INCOME ELASTICITY, INFLATION, INSURANCE, LARGE CITIES, LOW TARIFFS, M1, MACROECONOMIC CONDITIONS, MARGINAL COST, MARKET POWER, MERCHANDISE, MICROECONOMICS, MONOPOLIES, NETWORK EXTERNALITIES, OPERATING EXPENSES, PENALTIES, PERVERSE INCENTIVES, PRICE CAPS, PRICE DISCRIMINATION, PRICING POLICIES, PRICING STRATEGIES, PRICING STRATEGY, PRIVATIZATION, PUBLIC ENTERPRISES, PURE PROFIT, REGULATORY REGIMES, SUBSTITUTES, TRANSPORT, UNDERESTIMATES, VALUATION, VOTERS,
Online Access:http://documents.worldbank.org/curated/en/2000/09/693062/forecasting-demand-privatized-transport-economic-regulators-know
http://hdl.handle.net/10986/19786
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Summary:Forecasting has long been a challenge, and will remain so for the foreseeable future. But the analytical instruments and data processing capabilities available through the latest technology, and software, should allow much better forecasting than transport ministries, or regulatory agencies typically observe. Privatization brings new needs for demand forecasting. More attention is paid to risk under privatization, than when investments are publicly financed. And regulators must be able to judge traffic studies done by operators, and to learn what strategic behavior influenced these studies. Many governments, and regulators avoid good demand, modeling out of lack of conviction that theory, and models can do better than the "old hands" of the sector. This is dangerous when privatization changes the nature of business. For projects amounting to investments of $ 100-200 million, a cost of $ 100,000-200,000 is not a reason to reject a reasonable modeling effort. And some private forecasting firms are willing to sell guarantees, or insurance with their forecasts, to cover significant gaps between forecasts, and reality.

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