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Infrastructure concessions in Latin America : government-led renegotiations

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  • Guasch, J. Luis
  • Laffont, Jean-Jacques
  • Straub, Stephane

Abstract

The authors complement the existing knowledge in the renegotiation literature on infrastructure concessions by analyzing government-led renegotiations. They first propose a multiple-period theoretical framework in which both Pareto-improving and rent-shifting renegotiations at the initiative of the government can occur. They then perform an empirical analysis based on a sample of 307 water and transport projects in five Latin American countries between 1989 and 2000. While some of the main insights from the previous literature are unchanged, for example concerning the importance of having a regulator in place when awarding concessions and the fragility of price cap regulatory schemes, there are also significant differences as predicted by the model, in particular with respect to the effect of investment and financing, as well as the corruption variables. The authors provide additional evidence showing that a good regulatory framework is especially important in contexts with weak governance and political opportunism.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3749.

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Date of creation: 01 Oct 2005
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Handle: RePEc:wbk:wbrwps:3749

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References

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  1. 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.
  2. Cecile Aubert & Jean- Jacques Laffont, 2005. "Political renegotiation of regulatory contracts," Game Theory and Information 0506002, EconWPA.
  3. Straub, Stéphane, 2008. "Opportunism, Corruption, and the Multinational Firm’s Mode of Entry," Open Access publications from University of Toulouse 1 Capitole http://neeo.univ-tlse1.fr, University of Toulouse 1 Capitole.
  4. Stern, Jon & Cubbin, John, 2005. "Regulatory effectiveness : the impact of regulation and regulatory governance arrangements on electricity industry outcomes," Policy Research Working Paper Series 3536, The World Bank.
  5. Stephen Coate & Timothy Besley, 2000. "Elected versus Appointed Regulators: Theory and Evidence," NBER Working Papers 7579, National Bureau of Economic Research, Inc.
  6. Antonio Estache & J.L. Guasch & Lourdes Trujillo, 2003. "Price caps, efficiency pay-offs and infrastructure contract renegotiation in Latin America," ULB Institutional Repository 2013/44100, ULB -- Universite Libre de Bruxelles.
  7. 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.
  8. Joshua D. Angrist, 1991. "Instrumental Variables Estimation of Average Treatment Effects in Econometrics and Epidemiology," NBER Technical Working Papers 0115, National Bureau of Economic Research, Inc.
  9. Wallsten, Scott J, 2001. "An Econometric Analysis of Telecom Competition, Privatization, and Regulation in Africa and Latin America," Journal of Industrial Economics, Wiley Blackwell, vol. 49(1), pages 1-19, March.
  10. Rivers, Douglas & Vuong, Quang H., 1988. "Limited information estimators and exogeneity tests for simultaneous probit models," Journal of Econometrics, Elsevier, vol. 39(3), pages 347-366, November.
  11. 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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Cited by:
  1. Patricia Clarke Annez & George E. Peterson, 2007. "Financing Cities : Fiscal Responsibility and Urban Infrastructure in Brazil, China, India, Poland and South Africa," World Bank Publications, The World Bank, number 6735, September.
  2. Guasch, Jose Luis & Laffont, Jean-Jacques & Straub, Stéphane, 2007. "Concessions of Infrastructure in Latin America: Governement-led Renegotiation," Open Access publications from University of Toulouse 1 Capitole http://neeo.univ-tlse1.fr, University of Toulouse 1 Capitole.
  3. Estache, A. & Goicoechea, A. & Trujillo, L., 2007. "Utilities reforms and corruption in developing countries," Working Papers 07/07, Department of Economics, City University London.
  4. Stephane Straub, 2008. "Infrastructure and Growth in Developing Countries: Recent Advances and Research Challenges," ESE Discussion Papers 179, Edinburgh School of Economics, University of Edinburgh.
  5. Stephane Straub, 2008. "Infrastructure and Development: A Critical Appraisal of the Macro-level Literature," ESE Discussion Papers 178, Edinburgh School of Economics, University of Edinburgh.

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