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Maintenance Incentives in Highway Concession Contracts

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  • Ricardo Gonçalves
  • António Gomes

Abstract

In most European countries, the private sector has a direct or indirect participation in the construction, overhaul, maintenance, or operation of highways, normally through concession contracts and often with direct payments (tolls) by users. In this context, we construct a model, where demand also depends on road quality, in order to understand the incentives that a profit-maximising concessionaire has to maintain a highway in proper conditions. We provide an economic rationale for our results and also analyse how they are affected by changes in tolls, costs, and the duration of the concession contract. © 2012 LSE and the University of Bath

Suggested Citation

  • Ricardo Gonçalves & António Gomes, 2012. "Maintenance Incentives in Highway Concession Contracts," Journal of Transport Economics and Policy, University of Bath, vol. 46(1), pages 99-122, January.
    • Handle: RePEc:tpe:jtecpo:v:46:y:2012:i:1:p:99-122
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    References listed on IDEAS

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    1. Vickerman, Roger, 2004. "Maintenance incentives under different infrastructure regimes," Utilities Policy, Elsevier, vol. 12(4), pages 315-322, December.
    2. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, April.
    3. Rommert Dekker & Raymond Ph. Plasmeijer & Jan H. Swart, 1997. "Evaluation of a New Maintenance Concept for the Preservation of Highways," Tinbergen Institute Discussion Papers 97-129/4, Tinbergen Institute.
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    Cited by:

    1. David Martimort & Flavio Menezes & Myrna Wooders & ELISABETTA IOSSA & DAVID MARTIMORT, 2015. "The Simple Microeconomics of Public-Private Partnerships," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(1), pages 4-48, February.
    2. Yarmukhamedov, Sherzod & Smith, Andrew S.J. & Thiebaud, Jean-Christophe, 2020. "Competitive tendering, ownership and cost efficiency in road maintenance services in Sweden: A panel data analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 136(C), pages 194-204.
    3. Meng, Qiang & Lu, Zhaoyang, 2017. "Quantitative analyses of highway franchising under build-operate-transfer scheme: Critical review and future research directions," Transportation Research Part B: Methodological, Elsevier, vol. 102(C), pages 105-123.

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    More about this item

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L5 - Industrial Organization - - Regulation and Industrial Policy

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