Response to Peter Monkhouse

The regulation of infrastructure by the ACCC and other economic regulators in Australia is based around net present value estimation techniques. Recently; Monkhouse (2007) suggested that real options valuation would provide better incentives for investment in infrastructure; but did not elucidate how a regulatory system based on real options valuation should operate. This paper endeavours to sketch the outlines of such a system; and finds that it has considerable promise as an alternative to the status quo; provided an appropriate technique for addressing monopoly rents can be developed.Railways; economic regulation

The Enhancon and N=2 Gauge Theory/Gravity RG Flows

We study the family of ten dimensional type IIB supergravity solutions corresponding to renormalisation group flows from N=4 to N=2 supersymmetric Yang-Mills theory. Part of the solution set corresponds to a submanifold of the Coulomb branch of the gauge theory, and we use a D3-brane probe to uncover details of this physics. At generic places where supergravity is singular, the smooth physics of the probe yields the correct one-loop form of the effective low energy gauge coupling. The probe becomes tensionless on a ring at finite radius. Supergravity flows which end on this ``enhancon'' ring correspond to the vacua where extra massless degrees of freedom appear in the gauge theory, and the gauge coupling diverges there. We identify an SL(2,Z) duality action on the enhancon ring which relates the special vacua, and comment on the massless dyons within them. We propose that the supergravity solution inside the enhancon ring should be excised, since the probe's tension is unphysical there.Comment: 25 pages, 3 composite figures, LaTex (v2: reference added. clarifying footnote added. typos corrected, with addition to discussion of BPS dyons in section 7.

Economic governance of railways in a federation

Until recently, Australia?s State Government-owned railways operated almost entirely within their home states. This has begun to change, in response to the new dynamics unleashed by economic and structural reforms which began in the 1990s. The economic regulatory system that governs third party access to track infrastructure is still a mix of State and Federal regulation, which has lead to calls for greater consistency. However, it is not clear how much centralisation is optimal. This paper examines railway governance from an historical and a functional perspective, and argues that the best approach is not technocratic, but institutional