The signing of a concession contract for the Buenos Aires charges. And these improvements would probably not water and sanitation system in December 1992 attracted have occurred under public administration of the system. worldwide attention and caused considerable controversy Still, as Alcazar, Abdala, and Shirley show, information in Argentina.asymmetries, perverse incentives, and weak regulatory It was one of the world's largest concessions, but the institutions could threaten the concession's sustainability. case was also interesting for other reasons. TheOpportunities for the company to act opportunistically concession was implemented rapidly, in contrast with -and the regulator, arbitrarilyexist because of slow implementation of privatization in Santiago, for politicized regulation, a poor information base, serious example. And reform generated major improvements in flaws in the concession contract, a lumpy and ad hoc the sector, including wider coverage, better service, more tariff system, and a general lack of transparency in the efficient company operations, and reduced waste. regulatory process. Moreover, the winning bid brought an immediate 26.9Because of these circumstances, public confidence in percent reduction in water system tariffs.the process has eroded. The Buenos Aires concession Consumers benefited from the system's expansion and shows how important transparent, rule-based from the immediate drop in real prices, which was only decisionmaking is to maintaining public trust in regulated partly reversed by subsequent changes in tariffs and access infrastructure.This papera product of Regulation and Competition Policy, Development Research Groupis part of a larger effort in the group to analyze institutional issues in regulated infrastructure.
The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent.
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