The role of regulation in financing highway infrastructure in Italy

The paper discusses the present regulatory framework in Italy concerning highway infrastructures financing and provides some policy indications. The general Italian situation, including highways, is characterised by insufficient, or even perverse, incentives to efficiency. Also, the norms promote the tendency to overinvestment and “gold plating,” because applied within a weak planning framework. After a theoretical introduction to the financing mechanisms (public funding, PPP, price cap, etc.), the paper starts discussing the possible relationships between profitability and financing. Then, the Italian structure of conceded highways is outlined. A focus on the most significant case is provided, namely the privatisation of Autostrade per l’Italia. The regulatory mechanism adopted, a form of price-cap, is discussed and commented. Finally, some more general conclusions are stressed: the adopted regulation tend to give perverse incentives and to promote overinvestment