Regulation in a context of limited competition: A port case

This paper explains the rationale of the regulatory framework developed by the Peruvian regulator for transport infrastructure, using the 2004 Price Review at Matarani port as an illustration. This framework is worth analyzing for several reasons: (i) it ensures that prices are regulated only where competition cannot be introduced; (ii) the regulatory framework is common to all transport infrastructures; (iii) experience in port regulation using RPI-X methodology is scarce; and (iv), the market is characterized by low levels of demand and limited competition. In addition, he results of the price review suggest that in contexts characterized by institutional limitations and limited competition, estimation of a retrospective X factor using the TFP technique is recommendable. Likewise, if the industry is dominated by state-owned firms, the X factor should be estimated using data from the concessionaire rather than from the industry. Other recommendations are also formulated.