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Renegotiation of concession contracts in Latin America: Evidence from the water and transport sectors

Listed author(s):
  • Guasch, J. Luis
  • Laffont, Jean-Jacques
  • Straub, Stéphane

High rates of contract renegotiation have raised serious questions about the viability of the concession model to attract private participation in infrastructure in developing countries. After extending in reduced form a standard regulation model, in which renegotiation occurs due to the imperfect enforcement of concession contracts, we use a unique data set of 307 concessions awarded in Latin America from 1989 to 2000, covering the sectors of transport and water, to analyze the determinants of this high incidence of renegotiations of infrastructure contracts. We look in details at the impact, on the probability of renegotiation of a concession, of regulatory institutions, institutional features, economic shocks and of the characteristics of the concession contracts themselves. We then derive some policy implications of our work.

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File URL: http://www.sciencedirect.com/science/article/pii/S0167-7187(07)00068-9
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Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 26 (2008)
Issue (Month): 2 (March)
Pages: 421-442

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Handle: RePEc:eee:indorg:v:26:y:2008:i:2:p:421-442
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505551

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  23. Eduardo Engel & Ronald Fischer & Alexander Galetovic, 2000. "Franchising of infrastructure concessions in Chile: A Policy Report," Documentos de Trabajo 88, Centro de Economía Aplicada, Universidad de Chile.
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  28. Clive Harris, 2003. "Private Participation in Infrastructure in Developing Countries : Trends, Impacts, and Policy Lessons," World Bank Publications, The World Bank, number 15124, February.
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