Risk allocation and incentives for private contractors: an analysis of Italian project financing contracts
AbstractBased on the economic literature and international comparison, the paper examines the adequacy of the terms of Italian project financing contracts to build and operate public works, and identifies potential areas for improvement. We analyze the main contractual content of the public works construction and management concessions submitted to the Project Financing Technical Unit with a view to monitoring public-private contract partnerships. Overall, the analysis reveals the backwardness of the Italian system and the existence of not insignificant problem areas. The survey supports the need to foster adequate standardization of contracts in Italy aimed, in particular, at ensuring: i) the provision of more appropriate mechanisms for the employment of penalties for breach of contract by the concessionaire, especially in the management phase, and – conversely – of reward mechanisms; ii) the inclusion of clauses relative to the sharing of financing documents by the contracting authorities; iii) appropriate attention to the quantitative elements of the business plan; and iv) the strengthening of supervisory activity of the grantor during the various phases of the contract.
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Bibliographic InfoPaper provided by Bank of Italy, Economic Research and International Relations Area in its series Questioni di Economia e Finanza (Occasional Papers) with number 82.
Date of creation: Dec 2010
Date of revision:
project financing; regulation; risk allocation;
Find related papers by JEL classification:
- K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
- D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
- H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-01-03 (All new papers)
- NEP-CTA-2011-01-03 (Contract Theory & Applications)
- NEP-LAW-2011-01-03 (Law & Economics)
- NEP-PPM-2011-01-03 (Project, Program & Portfolio Management)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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"The Simple Micro-Economics of Public-Private Partnerships,"
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- Elisabetta Iossa & Federico Antellini Russo, 2008. "Potenzialità e criticità del Partenariato Pubblico Privato in Italia," Rivista di Politica Economica, SIPI Spa, vol. 98(3), pages 125-158, May-June.
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- Gregory Lewis & Patrick Bajari, 2011.
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The Quarterly Journal of Economics,
Oxford University Press, vol. 126(3), pages 1173-1211.
- Patrick Bajari & Gregory Lewis, 2009. "Procurement Contracting with Time Incentives: Theory and Evidence," NBER Working Papers 14855, National Bureau of Economic Research, Inc.
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