Bidding for Concessions--The Impact of Contract Design
Author: Michael Klein Date: 11/1/1998 (PDF, 200KB)
Infrastructure concession contracts set out the rights and performance obligations of concessionaires and the risks and incentives under which they operate, including pricing arrangements. The clarity with which these terms can be defined determines whether there is likely to be renegotiation after contract award, which may undermine the significance of the initial auction. The design of incentives and risk allocation will affect first the intensity of competition and then the sustainability of the original contract. This Note examines these issues.