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|Title:||The theory of incentives applied to the transport sector|
|Keywords:||Contracting out; public-private partnerships; public-service provision; transport|
|Citation:||Economics and Finance Discussion Paper, Brunel University, 09-13.|
|Abstract:||Building upon Iossa and Martimort (2008), we study the main incentive issues and the form of optimal contracts for Public Private Partnerships (PPPs) in transports. We present a basic model of procurement in a multitask environment in which a risk-averse firm chooses unobservable efforts in infrastructure and service quality. We begin by analyzing the effect on incentives and risk transfer of bundling building and operation into a single contract. We consider the factors that affect the optimal allocation of demand risk and their implications for the choice of contract length. We discuss the dynamics of PPP contracts and how the risk of regulatory opportunism affects contract design and incentives.|
|Appears in Collections:||Economics and Finance|
Dept of Economics and Finance Research Papers
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