Affiliations: [a] Department of Economics and Finance, Hong Kong Shue Yan University, North Point, Hong Kong
| [b] Office of Educational Services, The Chinese University of Hong Kong, Shatin, Hong Kong
Correspondence:
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Corresponding author: Fu-Lai Tony Yu, Department of Economics and Finance, Hong Kong Shue Yan University, North Point, Hong Kong. Tel.: +852 28048525; E-mail: flyu@hksyu.edu.
Abstract: This article compares the performance of high-speed rails (HSRs) in China and Taiwan in rent dissipation perspective. The article uses multiple criteria for comparison. In terms of total time spent on planning, designing and constructing a HSR, China takes longer time than Taiwan. However, China performs better than Taiwan in the actual construction time. Our study also reveals that both HSRs should not be built. Both rails have operated under heavy debt and financial loss and required government takeover (Taiwan) or heavy subsidy (China). Furthermore, in China, massive bribery associated with high rank officers or top party members in the construction of HSR is reported, while rent-seeking activities are prevalent in Taiwan’s HSR. Lastly, capturing rent via the deterioration of the quality of works is found severe in China, resulting in several fatal accidents. Serious accidents have not been found in the operation of Taiwan’s HSR. In conclusion, transaction costs are involved in policy making in both HSRs to different extents, and people in China and Taiwan seize opportunities to capture economic rent through the HSR project.
