Regulating Concessions of Toll Motorways, An Empirical Study on Fixed vs. Variable Term Contracts

Daniel Albalate and Germà Bel

No 200706, IREA Working Papers from University of Barcelona, Research Institute of Applied Economics

Abstract: Recent theoretical developments on concession contracts for long term infrastructure projects under uncertain demand show the benefits of allowing for flexible term contracts rather than fixing a rigid term. This study presents a simulation to compare both alternatives by using real data from the oldest Spanish toll motorway. For this purpose, we analyze how well the flexible term would have performed instead of the fixed length actually established. Our results show a huge reduction of the term of concession that would have dramatically decreased the firm’s benefits and the user’s overpayment due to the internalization of an unexpected traffic increase.

Keywords: Toll motorways; privatization; concessions; regulation. (search for similar items in EconPapers)
JEL-codes: H54 L33 L43 L92 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2007-03, Revised 2007-03
New Economics Papers: this item is included in nep-pbe and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Related works:
Journal Article: Regulating concessions of toll motorways: An empirical study on fixed vs. variable term contracts (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ira:wpaper:200706

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