Abstract

Cities can increase economic growth and participate in global economic flows by acting as hubs or gateways to regional corridors, that are supported by three dimensions of connectivity: physical (infrastructure) connectivity, digital connectivity, and economic integration. Integrating these dimensions increases economic output and generates more high-quality jobs. Connectivity integration also helps a city accumulate knowledge and has positive spillover effects for the broader economy. Chongqing stands out for its well-developed infrastructure and digital connectivity, but it has yet to leverage these assets to promote regional economic integration. This report recommends: leverage existing transport infrastructure and supplement it with better integration between land, air, and water transport to build a major logistics hub; strengthen cooperation with Chengdu, Sichuan, and other regional partners to promote regional economic integration; and improve digital infrastructure with faster internet connection speeds and promote the wider adoption of digitization of services.

Abstract

This publication is based on research carried out in the frame work of the Florence School of Regulation of the Robert Schuman Centre for Advanced Studies, European University Institute. We propose a merchant-regulatory framework to promote investment in the European natural gas network infrastructure based on a price cap over two-part tariffs. As suggested by Vogelsang (2001) and Hogan et al. (2010), a profit maximizing network operator facing this regulatory constraint will intertemporally rebalance the variable and fixed part of its two-part tariff so as to expand the congested pipelines, and converge to the Ramsey-Boiteaux equilibrium. We confirm this with actual data from the European natural gas market by comparing the bi-level price-cap model with a base case, a no-regulation case, and a welfare benchmark case, and by performing sensitivity analyses. In all cases, the incentive model is the best decentralized regulatory alternative that efficiently develops the European pipeline system.