THE REASONS FOR REGULATING THE TRANSPORTATION ECONOMY: ECONOMIC FUNDAMENTALS AND THE ROLE OF THE STATE IN CORRECTING MARKET FAILURES

Abstract

The economic regulation of transportation is one of the most evident expressions of the State's role as a regulatory agent and guarantor of the balance between market efficiency and public interest. This article analyzes the reasons that justify state intervention in the transportation economy, highlighting the importance of regulatory agencies in correcting market failures and preventing the abuse of economic power in sectors characterized by natural monopolies. Based on a literature review and document analysis, the study draws on contributions from the economic theory of regulation and Brazilian legislation, notably the 1988 Federal Constitution and Law No. 8.884/94, to demonstrate that the absence of competition compromises collective well-being and necessitates the presence of the "visible hand" of the State. It argues that, in public services granted, such as passenger transportation, regulation should ensure fair prices, adequate quality, and universal access, bringing the results obtained closer to those that would be achieved in competitive markets. It is concluded that regulation is an indispensable condition for ensuring social efficiency and economic justice in a sector essential to mobility and urban cohesion.