Renegotiation of concession contracts in Latin America

Guasch, J. Luis; Laffont, Jean‐Jacques; Straub, Stéphane

doi:10.1016/j.ijindorg.2007.05.003

Cited by 284 publications

(157 citation statements)

References 29 publications

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“…In a mechanism design framework, those rights induce a new constraints that those rights imply are somewhere in between participation and incentive constraints, a point also related to Forges (1989) and Matthews and Postelwaite (1989). In a general setting, Laffont and Martimort (2002, Chapter 9) and Guash, Laffont and Straub (2003) in the more specific context of developing countries present models with moral hazard ingredients that also discuss how incentive and enforcement constraints interact.…”

Section: Literature Reviewmentioning

confidence: 99%

A Theory of Contracts with Limited Enforcement

Martimort

Semenov

Stole

2016

Review of Economic Studies

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Abstract. We present a Theory of Contracts under costly enforcement in the context of a dynamic relationship between an uninformed buyer and a seller who is privately informed on his persistent cost at the outset. Public enforcement relies on remedies for breach. Private enforcement comes from severing relationships. We first characterize aggregate enforcement constraints ensuring that trading partners do not breach contracts unduly. Whether a longterm contract is enforceable does not depend on the distribution of penalties for breach between the buyer and the seller. While under complete information, the optimal contract would remain stationary, non-stationarity might arise under asymmetric information. Enforcement constraints are time-dependent and easier to satisfy as time passes. Indeed, a high-cost seller may be tempted to trade high volumes at high prices at the beginning of the relationship before breaching the contract later on. Yet, such take-the-money-and-run strategy becomes less attractive as time passes and can be prevented with backloaded payments. The optimal contract thus goes through two different phases. First, quantities and prices increase at the inception of the relationship. Later on, the contract looks more stationary. The public and private sides of enforcement plays different roles in determining the length of the earlier phase of contracting. Long-run screening distortions encapsulate the quality of enforcement, offering de facto a link between the quality of the legal system and contractual performances.

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Section: Literature Reviewmentioning

confidence: 99%

A Theory of Contracts with Limited Enforcement

Martimort

Semenov

Stole

2016

Review of Economic Studies

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“…Under PFI-type, the government specifies the output but the private actors retain the residual control rights regarding the service's delivery (Bennet & Iossa, 2010). In this sense, the PPP concept is more comprehensive, covering several other modes of private participation (privatization, concessions, outsourcing, institutional cooperation for joint production, and public policy networks) in the provision of public utilities (Chong et al, 2006;Guasch, Laffont, & Straub, 2008;Hodge & Greve, 2007).…”

Section: Ppp and The Impact Of Property Rightsmentioning

confidence: 99%

“…On the other hand, PPP can lead to malignant effects. In the presence of opportunistic behavior, either from governments or from private firms, underinvestment and rent-seeking renegotiations are likely to occur (Guasch et al, 2008). In all papers based on the incomplete contract theory, the distribution of property rights is at the core of the PPP analysis.…”

Section: Ppp and The Impact Of Property Rightsmentioning

confidence: 99%

Organizing Prisons through Public-Private Partnerships: a cross-country investigation

Cabral

Saussier

2012

BAR, Braz. Adm. Rev.

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In this paper, we analyze the private participation in prison services in three countries: Brazil, France, and the United States. We highlight striking differences in efficiency between these countries and argue that the explanation for these differences is not restricted to the way property rights are distributed (i.e. public vs. private management). Instead, our analysis suggests that understanding those differences also requires an analysis of the incentives provided by contractual choices as well as decision and revenue rights distribution and institutional constraints. The theoretical literature usually analyzes these blocks separately, and often focuses on property rights distribution. We argue that an efficient arrangement is the result of the way these elements are combined, giving rise to a distinctive governance structure.

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“…Turning next to renegotiation, the theoretical literature often defines the term broadly to include any modifications to P3 concession contracts (Guasch 2004;Guasch, Laffont, and Straub 2008). The empirical literature, in contrast, tends to consider only major revisions to contractual agreements that the original contracts did not account for (Guasch, Laffont, and Straub 2008).…”

Section: Introductionmentioning

confidence: 99%

“…The empirical literature, in contrast, tends to consider only major revisions to contractual agreements that the original contracts did not account for (Guasch, Laffont, and Straub 2008). Given this study's case study approach, we require a more broad definition to help us understand the nuances of the US P3 market.…”

Section: Introductionmentioning

confidence: 99%

Renegotiation of transportation public-private partnerships: The US experience

Gifford¹,

Bolaños²,

Daito³

2017

ITF Roundtable Reports

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in THE INTERNATIONAL TRANSPORT FORUMThe International Transport Forum at the OECD is an intergovernmental organisation with 54 member countries. It acts as a strategic think-tank, with the objective of helping shape the transport policy agenda on a global level and ensuring that it contributes to economic growth, environmental protection, social inclusion and the preservation of human life and well-being. The International Transport Forum organises an annual summit of Ministers along with leading representatives from industry, civil society and academia. Discussion PapersThe International Transport Forum's Discussion Paper Series makes economic research, commissioned or carried out at its Research Centre, available to researchers and practitioners. The aim is to contribute to the understanding of the transport sector and to provide inputs to transport policy design.ITF Discussion Papers should not be reported as representing the official views of the ITF or of its member countries. The opinions expressed and arguments employed are those of the authors.Discussion Papers describe preliminary results or research in progress by the author(s) and are published to stimulate discussion on a broad range of issues on which the ITF works. AbstractPublic-private partnerships (P3s) typically rely on long-term contracts between participants. When conditions arise that fall outside the expectations embodied in the contract, one party may seek to renegotiate the contract terms. Globally, the frequency of P3 contract renegotiations has been sufficient to raise questions regarding why these events occur and what their consequences are for the projects and society. The literature highlights four relevant causes behind renegotiation occurrences: unexpected exogenous changes, the complexity of the contractual relationship, winner´s curse and rent seeking behavior. This study examines the US experience with highway P3 renegotiations, including four types of event: contract modifications, defaults, bankruptcies and buyouts. While the US highway P3 market has grown gradually, failure to understand renegotiations and their potential consequences may dampen the market and adversely affect national infrastructure investment efforts. The analysis finds that insufficient evidence exists to disentangle the drivers of renegotiation in the US, although exogenous changes and contractual relationship complexity appear to be paramount. The analysis highlights th...

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Renegotiation of concession contracts in Latin America

Cited by 284 publications

References 29 publications

A Theory of Contracts with Limited Enforcement

A Theory of Contracts with Limited Enforcement

Organizing Prisons through Public-Private Partnerships: a cross-country investigation

Renegotiation of transportation public-private partnerships: The US experience

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