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Privatizing Highways in the United States

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Author Info

  • Eduardo Engel

    ()

  • Ronald Fischer

    ()

  • Alexander Galetovic

    ()

Abstract

We review the experience of both private toll-roads built in the United States during the 1990s, and argue that the problems they encountered could have been avoided if the length of the franchise contract would adapt to demand realizations. We also argue in favor of adjudicating private toll-roads via BOT-type contracts in competitive (Demsetz) auctions. The lessons of this paper are relevant since growing congestion and troubled government finances have made private toll-roads increasingly attractive in the United States. Copyright Springer 2006

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File URL: http://hdl.handle.net/10.1007/s11151-006-9108-6
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Bibliographic Info

Article provided by Springer in its journal Review of Industrial Organization.

Volume (Year): 29 (2006)
Issue (Month): 1 (September)
Pages: 27-53

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Handle: RePEc:kap:revind:v:29:y:2006:i:1:p:27-53

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Web page: http://www.springerlink.com/link.asp?id=100336

Related research

Keywords: BOT contracts; cost-of-funds; Demsetz auction; privatization; subsidies;

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References

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  1. Adams, Matthew & Hiatt, Rachel & Hill, Mary C. & Russo, Ryan & Wachs, Martin & Weinstein, Asha, 2001. "Financing Transportation in California: Strategies for Change (Final Draft)," Institute of Transportation Studies, Research Reports, Working Papers, Proceedings qt7fh2v7zd, Institute of Transportation Studies, UC Berkeley.
  2. Eduardo Engel & Ronald Fischer & Alexander Galetovic, 1998. "Infraestructure Franchising and Government Guarantees," Documentos de Trabajo 29, Centro de Economía Aplicada, Universidad de Chile.
  3. repec:reg:wpaper:504 is not listed on IDEAS
  4. Clifford Winston, 2000. "Government Failure in Urban Transportation," Fiscal Studies, Institute for Fiscal Studies, vol. 21(4), pages 403-425, December.
  5. Eduardo M. R. A. Engel & Ronald D. Fischer & Alexander Galetovic, 2001. "Least-Present-Value-of-Revenue Auctions and Highway Franchising," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 993-1020, October.
  6. J. Luis Guasch & Jean-Jacques Laffont & Stephane Straub, 2004. "Renegotiation of Concession Contracts in Latin America," ESE Discussion Papers 103, Edinburgh School of Economics, University of Edinburgh.
  7. Patrick Bajari & Stephanie Houghton & Steve Tadelis, 2006. "Bidding for Incomplete Contracts: An Empirical Analysis," NBER Working Papers 12051, National Bureau of Economic Research, Inc.
  8. J. Luis Guasch, 2004. "Granting and Renegotiating Infrastructure Concessions : Doing it Right," World Bank Publications, The World Bank, number 15024, July.
  9. Eduardo Engel & Ronald Fischer & Alexander Galetovic, 2003. "Privatizing Highways in Latin America: Fixing What Went Wrong," JOURNAL OF LACEA ECONOMIA, LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
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Citations

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Cited by:
  1. Peter G. Klein & Joseph T. Mahoney & Anita McGahan & Christos N. Pitelis, 2010. "Toward a Theory of Public Entrepreneurship," DRUID Working Papers 10-07, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  2. Jean-Michel Glachant & Stéphane Saussier, 2006. "Introduction," Review of Industrial Organization, Springer, vol. 29(1), pages 1-2, September.
  3. Athias, Laure & Nunez, Antonio, 2008. "The more the merrier? Number of bidders, information dispersion, renegotiation and winner’s curse in toll road concessions," MPRA Paper 10539, University Library of Munich, Germany.
  4. Clifford Winston & Jia Yan, 2008. "US Highway Privatization and Heterogeneous Preferences," Working Papers 2008-20, School of Economic Sciences, Washington State University.
  5. Geddes, R. Richard & Wagner, Benjamin L., 2013. "Why do U.S. states adopt public–private partnership enabling legislation?," Journal of Urban Economics, Elsevier, vol. 78(C), pages 30-41.
  6. Desrieux, Claudine & Chong, Eshien & Saussier, Stéphane, 2013. "Putting all one's eggs in one basket: Relational contracts and the management of local public services," Journal of Economic Behavior & Organization, Elsevier, vol. 89(C), pages 167-186.
  7. de Brux, Julie, 2010. "The Dark and Bright Sides of Renegotiation: An Application to Transport Concession Contracts," Utilities Policy, Elsevier, vol. 18(2), pages 77-85, June.
  8. Athias, Laure & Saussier, Stéphane, 2007. "Contractual flexibility or rigidity for public private partnerships? Theory and evidence from infrastructure concession contracts," MPRA Paper 10541, University Library of Munich, Germany.
  9. Athias, Laure, 2007. "Political accountability, incentives, and Contractual design of public private partnerships," MPRA Paper 10538, University Library of Munich, Germany.
  10. Winston, Clifford & Yan, Jia, 2011. "Can privatization of U.S. highways improve motorists' welfare?," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 993-1005, August.
  11. Viegas, José M., 2010. "Questioning the need for full amortization in PPP contracts for transport Infrastructure," Research in Transportation Economics, Elsevier, vol. 30(1), pages 139-144.

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