A model of public and private partnership through concession contracts

Pasquale Scandizzo and Marco Ventura

No 104, ISAE Working Papers from ISTAT - Italian National Institute of Statistics - (Rome, ITALY)

Abstract: In this paper, we investigate the economics of concession under dynamic uncertainty using real option theory. We analyze the properties of concession as an instrument to privatize investment and management of public resources. In this context, we explore, in particular, three issues: (1) the conditions under which the contract is acceptable to both a public and a private party, (2) the conditions under which it is efficient, i.e. it is preferable to direct development and operation by the public sector, and (3) two different possible equilibrium solutions. Finally, we apply the theoretical results obtained to the case of a major public highway concessionaire in Italy.

Keywords: concession contract; real option; license; Autostrade per l’Italia; private and public partnership (search for similar items in EconPapers)
JEL-codes: D45 H44 H54 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2008-07
New Economics Papers: this item is included in nep-pbe and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:isa:wpaper:104

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