The Joy of Flying: Efficient Airport PPP contracts

Eduardo Engel, Ronald Fischer and Alexander Galetovic ()

No 322, Documentos de Trabajo from Centro de Economía Aplicada, Universidad de Chile

Abstract: We examine optimal contracts for PPPs which receive revenue from user fees as well as ancillary commercial revenue, for example from commercial space in the case of airports. We assume that demand for the project is exogenous. Ancillary revenue is observable and requires effort by the concessionaire. If this additional revenue is proportional to demand for the underlying PPP project, we show that the optimal contract of the concessionaire eliminates all exogenous risk but retains a fraction of the endogenous risk. The contract can be implemented via a standard Present-Value-of-Revenue (PVR) auction (Engel et al., 2001). JEL classiffications: H440, R420, L51 Key words: Creation-Date: 2015

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Related works:
Journal Article: The joy of flying: Efficient airport PPP contracts (2018)
Working Paper: The Joy of Flying: Efficient Airport PPP Contracts (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:edj:ceauch:322

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