The Theory of Incentives Applied to the Transport Sector

Elisabetta Iossa and David Martimort

The Centre for Market and Public Organisation from The Centre for Market and Public Organisation, University of Bristol, UK

Abstract: Building upon Iossa and Martimort (2008), we study the main incentive issues and the form of optimal contracts for Public Private Partnerships (PPPs) in transports. We present a basic model of procurement in a multitask environment in which a risk-averse firm chooses unobservable efforts in infrastructure and service quality. We begin by analyzing the effect on incentives and risk transfer of bundling building and operation into a single contract. We consider the factors that affect the optimal allocation of demand risk and their implications for the choice of contract length. We discuss the dynamics of PPP contracts and how the risk of regulatory opportunism affects contract design and incentives.

Keywords: Contracting out; public-private partnerships; public-service provision; transport (search for similar items in EconPapers)
JEL-codes: D8 H54 H57 L5 L91 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2009-02
New Economics Papers: this item is included in nep-cta and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (35)

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Related works:
Chapter: The Theory of Incentives Applied to the Transport Sector (2011)
Working Paper: The Theory of Incentives Applied to the Transport Sector (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:bri:cmpowp:09/210

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