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Contract choice, incentives and political capture in public transport services

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  • Gagnepain, Philippe
  • Ivaldi, Marc

Abstract

We consider a framework of contractual interactions between urban transport authorities and transport operators. We estimate simultaneously the choice of contract by the authorities and the effect of regulation on the cost reducing activity of the operators. We test whether regulatory schemes currently implemented in the industry are the observable items of a more general menu of second best contracts. We suggest that the generation process of the data we have in hand is better explained by the political aspects of regulation. Moreover, the cost reducing effort of the operators is greater under fixed-price regimes, compared to the cost-plus case.

Suggested Citation

  • Gagnepain, Philippe & Ivaldi, Marc, 2009. "Contract choice, incentives and political capture in public transport services," UC3M Working papers. Economics we096641, Universidad Carlos III de Madrid. Departamento de Economía.
  • Handle: RePEc:cte:werepe:we096641
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    References listed on IDEAS

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    Cited by:

    1. Xavier d'Haultfoeuille & Philippe Février, 2010. "Identification of a Class of Adverse Selection Models with Contracts Variation," Working Papers 2011-27, Center for Research in Economics and Statistics.

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