Abstract
The types of government interventions in the transport sector may be classified along a spectrum ranging from direct government intervention, where the government, possibly by owning the company, directly sets the strategic variables of the transportation service provider or of the infrastructure operators, to indirect interventions that modify suppliers’ or consumers’ incentives, possibly through taxes. We analyze the interplay of these interventions as they are applied to correct market power distortions, and to correct environmental and congestion externalities. We argue that, often, indirect interventions are preferable to direct ones.