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Concesiones de plazo variable para la construcción y explotación de autopistas
[Variable-term concessions for road construction and operation]

Author

Listed:
  • de Rus, Gines
  • Nombela, Gustavo

Abstract

Private sector participation in infrastructure projects traditionally financed by governments (roads, airports, seaports) is increasing around the world. This paper describes how a toll road concession works. It discusses how the usual mechanism, based on a concession contract with a pre-determined fixed term, and a selection process of concessionaires through minimum-toll auctions, does not lead to optimal outcomes. In particular, it is shown how this type of mechanism in fact lies behind the frequent concession contract renegotiations observed in practice. A new mechanism is proposed, based on a flexible term concession, which is adjusted according to the actual traffic level using the road, and an auction with bids for total net revenue and maintenance costs. This new mechanism eliminates traffic risk from toll road concessions, and it guarantees an effective selection of the most efficient concessionaires.

Suggested Citation

  • de Rus, Gines & Nombela, Gustavo, 2003. "Concesiones de plazo variable para la construcción y explotación de autopistas [Variable-term concessions for road construction and operation]," MPRA Paper 12653, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:12653
    as

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    References listed on IDEAS

    as
    1. 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.
    2. Antonio Estache, 2001. "Privatization and Regulation of Transport Infrastructure in the 1990s'," ULB Institutional Repository 2013/43998, ULB -- Universite Libre de Bruxelles.
    3. Newbery, David M, 1989. "Cost Recovery from Optimally Designed Roads," Economica, London School of Economics and Political Science, vol. 56(222), pages 165-185, May.
    4. Engel, Eduardo & Fischer, Ronald & Galetovic, Alexander, 1997. "Highway Franchising: Pitfalls and Opportunities," American Economic Review, American Economic Association, vol. 87(2), pages 68-72, May.
    5. Hinojosa, Sergio & Gomez-Lobo, Andres, 2000. "Broad roads in a thin country - infrastructure concessions in Chile," Policy Research Working Paper Series 2279, The World Bank.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    roads; highways; franchising; concessions; auctions;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General

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