Bidding for Concessions : The Impact of Contract Design

Abstract

Infrastructure concession contracts set out the performance obligations and rights of concessionaires and the incentives and risks under which they operate, including pricing arrangements. The clarity with which these terms can be defined determines whether there is likely to be renegotiations 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.