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Concession contract renegotiations : some efficiency versus equity dilemmas

Author

Listed:
  • Estache, Antonio
  • Quesada, Lucia
Abstract
The authors analyze the possibility of tradeoffs between efficiency and equity as well as the possibility of distributional conflicts in the context of renegotiation of infrastructure contracts in developing countries. To do so, they present a model in which contracts are awarded by auctioning the right to operate an infrastructure service to a private monopoly, and consider the possibility of renegotiation. To identify the potential sources of tradeoffs, they trackthe possible outcomes of different renegotiation strategies for the monopoly running the concession and for the two groups of consumers-rich and poor-who alternate in power according to a majority voting rule. Among the model? most important policy implications is this: if having firm-driven renegotiations is a major concern, efficiency should not be the only consideration in selecting an operator. Indeed, consumers may want to award the concession to a less efficient firm if that would reduce the probability of renegotiation, since a lower probability of firm-driven renegotiations (due to demand shocks, for example) is associated with higher welfare for all service users.

Suggested Citation

  • Estache, Antonio & Quesada, Lucia, 2001. "Concession contract renegotiations : some efficiency versus equity dilemmas," Policy Research Working Paper Series 2705, The World Bank.
    • Handle: RePEc:wbk:wbrwps:2705
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    References listed on IDEAS

    as
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    9. repec:adr:anecst:y:1994:i:34:p:04 is not listed on IDEAS
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    15. repec:adr:anecst:y:1992:i:25-26:p:06 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Claude Ménard, 2012. "Hybrid Modes of Organization. Alliances, Joint Ventures, Networks, and Other 'Strange' Animals," Post-Print halshs-00624291, HAL.
    2. Mauricio Bugarin & Wilfredo Leiva Maldonado, 2024. "Endogenous Asymmetry in Sequential Auctions," Working Papers, Department of Economics 2024_21, University of São Paulo (FEA-USP).
    3. Antonio Estache & L. Wren-Lewis, 2008. "Towards a Theory of Regulation for Developing Countries: Following Laffont's Lead," Working Papers ECARES 2008_018, ULB -- Universite Libre de Bruxelles.
    4. Antonio Estache & Liam Wren-Lewis, 2009. "Toward a Theory of Regulation for Developing Countries: Following Jean-Jacques Laffont's Lead," Journal of Economic Literature, American Economic Association, vol. 47(3), pages 729-770, September.
    5. Antonio Estache & Liam Wren-Lewis, 2012. "Supranational Infrastructure Regulation: Institutional Opportunities and Challenges," Working Papers ECARES ECARES 2012-025, ULB -- Universite Libre de Bruxelles.
    6. J. Luis Guasch, 2004. "Granting and Renegotiating Infrastructure Concessions : Doing it Right," World Bank Publications - Books, The World Bank Group, number 15024.
    7. Luis Alberto Andrés & José Luis Guasch & Sebastián López Azumendi, 2011. "Regulation and Corporate Governance of State-owned Enterprises: Issues for Improved Efficiency and Competitiveness and Lessons for China," Chapters, in: Michael Faure & Xinzhu Zhang (ed.), Competition Policy and Regulation, chapter 7, Edward Elgar Publishing.
    8. Andrés Pereyra, 2003. "Marchas y contramarchas en la concesión de carreteras en Uruguay," Documentos de Trabajo (working papers) 1703, Department of Economics - dECON.
    9. Alberto Chong & Florencio de, 2003. "The Truth about Privatization in Latin America," Yale School of Management Working Papers ysm436, Yale School of Management.
    10. repec:hal:wpaper:halshs-00624291 is not listed on IDEAS
    11. De Chiara, Alessandro, 2015. "Holding an Auction for the Wrong Project," MPRA Paper 72108, University Library of Munich, Germany, revised 21 Apr 2015.

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