An Adverse Selection Analysis of Compensatory Policy on Metropolitan Mass Rapid Transit System Construction
Date Issued
2009
Date
2009
Author(s)
Ma, Yung-Chiang
Abstract
While the development of mass rapid transit system is critical for the transformation of metropolitans, further research and discussion are required to determine if such construction project is beneficial or detrimental for the public overall. When attempting to implement a public structure or service, bureaucrats often neglect to mention the negative externalities in the fear that they might cause the abandoning of the proposed projects. This is known as adverse selection and often leads to social and economical loss for certain population group. As a result, government should compensate the victims in accordance to the democratic legal system to achieve social fairness and justice. This thesis focuses on the perspective of adverse selection with an analysis of the MRT NeiHu Line case study. Using principles of public choice and principal-agent theory as the basis, the supplementary employment of interviewing methods uncovers the bureaucratic gentrification and adverse selection that exists throughout the development of the MRT Neihu Line. Field survey was undertaken to demonstrate the degree of resulting social and economical impact. Consolidation of the interview and field survey results, along with consultation of foreign countries’ case studies of public construction compensatory policies to surrounding businesses, has enabled this thesis to make recommendations to the decision making of compensatory policy in Taiwan. Although compensation can be the part of the passive resolution, the true solution lies in the eradication of adverse selection. Therefore, this thesis examines that adverse selection can arise during the feasibility analysis, detail design, construction and operational management stage and to further present strategy analysis along with recommendations. Hopefully this thesis can serve as references and help propel towards positive changes in public compensatory policies in the future.
Subjects
MRT NeiHu Line
Gentrification
Adverse Selection
Compensation
Strategy Analysis
SDGs
Type
thesis
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