The Theory of Incentives Applied to the Transport Sector

Elisabetta Iossa and David Martimort

CEDI Discussion Paper Series from Centre for Economic Development and Institutions(CEDI), Brunel University

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 bunding 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 design and incentives.

Pages: 25 pages
Date: 2009-02
New Economics Papers: this item is included in nep-cta
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Citations: View citations in EconPapers (38)

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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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