Bidding for concessions

Klein, Michael

Bidding for concessions

No 1957, Policy Research Working Paper Series from The World Bank

Abstract: Privatization of infrastructure ventures in sectors such as energy, telecommunication, transport, and water has become popular over the last decade. Often- for good or bad reasons - private firms are given monopoly franchises under some type of long-term concession agreement, for example"Build-Operate-Transfer"schemes. The article surveys the issues arising in designing specifications as well as incentive and risk-sharing parameters comprehensively and consistently both to achieve efficient performance by the concessionaire and to minimize post-award renegotiations. Concession award should as a rule be made competitively, unless special requirements of speed, innovation, or excessive transaction cost argue otherwise. Typically, competitive concession award is made by first price sealed bids. There are strong arguments, however, to consider open auctions more seriously in a number of cases. Auctions may also be re-awarded by way of auction. However, somewhat arbitrary bid preferences may have to be set. Auctioneers for complex concession contracts should operate at arms-length from all interested parties, including politicians. It may be sensible to let independent agencies that regulate the concession scheme run the auction.

Keywords: Decentralization; Environmental Economics&Policies; Markets and Market Access; International Terrorism&Counterterrorism; Economic Theory&Research; International Terrorism&Counterterrorism; Environmental Economics&Policies; Access to Markets; Markets and Market Access; Economic Theory&Research (search for similar items in EconPapers)
Date: 1998-08-31
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Citations: View citations in EconPapers (25)

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Related works:
Working Paper: Rebidding for Concessions (1998)
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