Development of railway services and financial regulation in market conditions

Abstract

The financial regulation of transportation services turns to be crucial for each economy. In a long–term perspective Mr. Adam Smith’s “invisible hand” ideally provides for this regulation. However, the analysis proves that on the mid–term horizon the basic supply and demand rules do not work properly and cyclically may lead either to a proficit or a deficit of the required amount of rolling stock. To smooth out these extremes, the state financial regulation of railway operators is required. This article considers one of the crucial elements of state financial regulation – tax incentives for active investors – and provides for the new ideas in fiscal stimulation for railway operators in Russia. These ideas can be widely used in various countries all over the world to reduce negative consequences of macroeconomic cyclical extremes.