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Rates of Return and Government Subsidization of the Canadian Pacific Railway: Some Further Remarks

1975; Wiley; Volume: 8; Issue: 4 Linguagem: Inglês

10.2307/133917

1540-5982

Peter George,

Transport and Economic Policies

In a recent note, Mercer (1973) provides some alternative calculations to mine (George, 1968b) for analysing the perennial question whether 'excessive' subsidies were paid for the construction of the Canadian Pacific Railway. The main thrust of Mercer's argument is that such calculations ought to be based upon 'the economic (internal) rate of return which has a foundation in neoclassical theory' and not upon 'the accounting technique used by George.'1 This note is addressed to three questions. The first concerns Mercer's claims for the superiority of internal rate of return calculations. The second and third are independent of this first issue and concern the different ways in which Mercer and I conceive of the CPR project and the desirability of the incltusion of various cost and subsidy items.