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Corruption and concession renegotiations.: Evidence from the water and transport sectors in Latin America

  • Guasch, J. Luis
  • Straub, Stphane

Numerous renegotiations have plagued water and transport concession contracts in Latin America. Using a panel dataset of over 300 concession contracts from Latin America between 1989 and 2000, we show that country-level corruption is a significant determinant of these renegotiations and that the effect of corruption varies depending on the type of renegotiations considered. While a more corrupt environment clearly leads to more firm-led renegotiations, it significantly reduces the incidence of government-led ones. The paper then discusses and tests the likely channels through which these different effects of corruption arise, looking in particular at the interactions between country-level corruption and relevant microeconomic institutions.

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Article provided by Elsevier in its journal Utilities Policy.

Volume (Year): 17 (2009)
Issue (Month): 2 (June)
Pages: 185-190

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Handle: RePEc:eee:juipol:v:17:y:2009:i:2:p:185-190
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  1. Eduardo Engel & Ronald Fischer & Alexander Galetovic, 2006. "Renegotiation Without Holdup: Anticipating Spending and Infrastructure Concessions," NBER Working Papers 12399, National Bureau of Economic Research, Inc.
  2. Patrick Bajari & Robert S. McMillan & Steve Tadelis, 2003. "Auctions Versus Negotiations in Procurement: An Empirical Analysis," NBER Working Papers 9757, National Bureau of Economic Research, Inc.
  3. Estache, Antonio & Goicoechea, Ana & Trujillo, Lourdes, 2006. "Utilities reforms and corruption in developing countries," Policy Research Working Paper Series 4081, The World Bank.
  4. David Martimort & Stephane Straub, 2006. "Privatization and Changes in Corruption Patterns: The Roots of Public Discontent," ESE Discussion Papers 147, Edinburgh School of Economics, University of Edinburgh.
  5. Laffont,Jean-Jacques, 2005. "Regulation and Development," Cambridge Books, Cambridge University Press, number 9780521549486.
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  8. Manzetti, Luigi, 1999. "Privatization South American Style," OUP Catalogue, Oxford University Press, number 9780198294665, July.
  9. J. Luis Guasch & Jean-Jacques Laffont & Stephane Straub, 2005. "Concessions of Infrastructure in Latin America: Government-led Renegotiation," ESE Discussion Papers 132, Edinburgh School of Economics, University of Edinburgh.
  10. Bajari, Patrick & Tadelis, Steven, 2001. "Incentives versus Transaction Costs: A Theory of Procurement Contracts," RAND Journal of Economics, The RAND Corporation, vol. 32(3), pages 387-407, Autumn.
  11. Rose-Ackerman,Susan, 1999. "Corruption and Government," Cambridge Books, Cambridge University Press, number 9780521659123.
  12. Guasch, J. Luis & Laffont, Jean-Jacques & Straub, Stephane, 2003. "Renegotiation of concession contracts in Latin America," Policy Research Working Paper Series 3011, The World Bank.
  13. J. Luis Guasch, 2004. "Granting and Renegotiating Infrastructure Concessions : Doing it Right," World Bank Publications, The World Bank, number 15024.
  14. Guasch, J. Luis & Laffont, Jean-Jacques & Straub, Stéphane, 2008. "Renegotiation of concession contracts in Latin America: Evidence from the water and transport sectors," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 421-442, March.
  15. Shapiro, C. & Willing, D.R., 1990. "Economic Rationales For The Scope Of Privatization," Papers 41, Princeton, Woodrow Wilson School - Discussion Paper.
  16. Dal Bo, Ernesto & Rossi, Martin A., 2007. "Corruption and inefficiency: Theory and evidence from electric utilities," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 939-962, June.
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