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Soft budgets and endogenous renegotiations in transport PPPs: An equilibrium analysis

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  • Engel, Eduardo M.R:A.
  • Fischer, Ronald
  • Galetovic, Alexander
Abstract
•Most countries keep PPP investments off balance sheet.•Governments renegotiate PPPs and use off-balance sheet finance to elude spending limits.•Future administrations pay a large fraction of the incumbent's additional spending.•Neither ex ante spending limits nor ex post competitive bidding for renegotiated contracts stem the tendency of the incumbent to bring forward infrastructure spending.

Suggested Citation

  • Engel, Eduardo M.R:A. & Fischer, Ronald & Galetovic, Alexander, 2019. "Soft budgets and endogenous renegotiations in transport PPPs: An equilibrium analysis," Economics of Transportation, Elsevier, vol. 17(C), pages 40-50.
  • Handle: RePEc:eee:ecotra:v:17:y:2019:i:c:p:40-50
    DOI: 10.1016/j.ecotra.2018.12.003
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    References listed on IDEAS

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    1. Eduardo Engel & Ronald Fischer & Alexander Galetovic, 2003. "Privatizing Highways in Latin America: Fixing What Went Wrong," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2003), pages 129-164, August.
    2. Eduardo Bitran & Sebastián Nieto-Parra & Juan Sebastián Robledo, 2013. "Opening the Black Box of Contract Renegotiations: An Analysis of Road Concessions in Chile, Colombia and Peru," OECD Development Centre Working Papers 317, OECD Publishing.
    3. Eduardo Engel & Ronald Fischer & Alexander Galetovic & Manuel Hermosilla, 2009. "Renegociación de concesiones en Chile," Documentos de Trabajo 262, Centro de Economía Aplicada, Universidad de Chile.
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    13. David Martimort & Flavio Menezes & Myrna Wooders & DANIEL DANAU & ANNALISA VINELLA, 2015. "Public-Private Contracting under Limited Commitment," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(1), pages 78-110, February.
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    Cited by:

    1. Bonifaz, José L. & Saavedra, Eduardo H., 2023. "Aggressive bidding and the renegotiation of concession contracts: Empirical evidence from Peru," Utilities Policy, Elsevier, vol. 85(C).
    2. Engel,Eduardo & Ferrari,Martín & Fischer,Ronald & Galetovic,Alexander, 2022. "Managing the Fiscal Risks Wrought by PPPs : A Simple Framework and Some Lessons from Chile," Policy Research Working Paper Series 10056, The World Bank.
    3. Daniel Danau & Annalisa Vinella, 2021. "Under/Over‐Investment and Early Renegotiation in Public‐Private Partnerships," Journal of Industrial Economics, Wiley Blackwell, vol. 69(4), pages 923-966, December.
    4. Jean Beuve & Stéphane Saussier, 2021. "Renegotiations and Renewals of Public Contracts," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 59(3), pages 461-482, November.
    5. Fonseca-Mairena, María Haydée & Triossi, Matteo, 2019. "Incentives and implementation in marriage markets with externalities," Economics Letters, Elsevier, vol. 185(C).
    6. Jean Beuve & Marian W Moszoro & Pablo T Spiller, 2023. "Doing It by the Book: Political Contestability and Public Contract Renegotiations," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 39(1), pages 281-308.
    7. Ronald Fischer & Nicolás Campos & Eduardo Engel & Alexander Galetovic, 2019. "Renegotiations and Corruption in Infrastructure: The Odebrecht Case," Documentos de Trabajo 346, Centro de Economía Aplicada, Universidad de Chile.

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