Incentive approaches to overcome moral hazard in port concession agreements

Grace Wang and Athanasios Pallis

Transportation Research Part E: Logistics and Transportation Review, 2014, vol. 67, issue C, 162-174

Abstract: This paper provides a game theory foundation for port concession agreements, using the incentive mechanism design. This study identifies the post contractual moral hazard problem, and provides a model involving performance-based concession fees to align successfully the Port Authorities’ interests with those of the terminal operators. To match theory and practice, factual information of recent projects in Europe and the US is reviewed. Evidently, to avoid transaction failures in a Greenfield concession, the port authority needs to identify clearly the objectives undertaken. The port should have the ability to enforce the contract and determine the process of quality assurance.

Keywords: Port terminals concessions; Performance-based concession; Incentives; Moral hazard (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (25)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:transe:v:67:y:2014:i:c:p:162-174

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DOI: 10.1016/j.tre.2014.04.008

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