Engel, EduardoGaletovic, Alexander2014-06-252014-06-252014-05https://hdl.handle.net/10986/18746Cities exist, grow, and prosper because they take advantage of scale economies and specialization wrought by agglomeration. But output growth inevitably stresses transport infrastructure because production requires space and mobility. To prevent congestion from crowding out agglomeration benefits and to expand the supply of urban land, cities must invest in transport infrastructure. Yet balancing the growing demand for infrastructure with its supply is often difficult. In particular, many cities lack the funding to maintain and expand streets and urban highways. Also problematic is that roads are managed like a social service rather than subjected to market discipline. This leads to the central question of this chapter: Can public-private partnerships (PPPs) deal with these problems better than conventional public provision and ensure proper maintenance, timely expansion, and less congestion? And if so, how? To answer these questions, the paper examines what PPPs can do and what they need to work, focusing in particular on the role of institutions. This is followed by an investigation of common PPP pitfalls and the ways in which they can be avoided. The paper concludes with a case study of a successful transportation PPP in Chile that emphasizes the importance of planning.en-USCC BY 3.0 IGOACCIDENTSACCOUNTINGAGGLOMERATIONAGGLOMERATION BENEFITSAPPROPRIATIONSASSET OWNERSHIPBALANCE SHEETBASIS POINTSBIDBIDSBONDBOND FINANCINGBONDHOLDERBONDHOLDERSBONDSBRIDGEBUY BACKCAPACITY EXPANSIONCAPITAL MARKETCAPITAL REQUIREMENTSCARCAR TRAVELCARSCASH FLOWSCITIESCONCESSIONCONCESSIONAIRESCONCESSIONSCONGESTIONCONTRACT DESIGNCONTRACT MONITORINGCONTRACT RENEGOTIATIONCONTRACTUAL OBLIGATIONCOST OF CAPITALCOUNTRY RISKCOUNTY TRANSPORTATIONDAILY TRIPSDEBTDECENTRALIZATIONDEFAULT RISKDISCOUNT RATEDRIVINGECONOMIC PERFORMANCEEFFICIENT SCALE OF OPERATIONELASTICITYELASTICITY OF DEMANDELECTRICITYEXCHANGE RATEEXPRESS LANESEXPROPRIATIONEXTERNALITIESFINANCIAL CRISISFINANCIAL MARKETFINANCIAL SUPPORTFINANCIAL VIABILITYFRANCHISE AGREEMENTFREEWAYFUTURE DEMANDGOVERNMENT BUDGETGOVERNMENT DEBTGOVERNMENT GUARANTEESGOVERNMENT PAYMENTSGOVERNMENT SPENDINGGROWTH RATESHIGHWAYHIGHWAY MAINTENANCEHIGHWAY PROJECTSINCOMEINCOME ELASTICITYINFRASTRUCTURE COSTSINFRASTRUCTURE PROJECTSINFRASTRUCTURE PROVISIONINSTITUTIONAL REFORMINTEREST RATESINTERNATIONAL AIRPORTINTERNATIONAL BANKINTERNATIONAL TRADELENDERLOCAL GOVERNMENTSMAINTENANCE CONTRACTORSMARKET DISCIPLINEMARKET ECONOMYMOBILITYMORAL HAZARDMOTOR VEHICLESMOTORISTSMUNICIPALITIESNATIONAL GOVERNMENTSNEGATIVE EXTERNALITIESNOISEOPEN ACCESSOPERATING EXPENSESPIERSPLEDGESPOLLUTIONPOWERPRESENT VALUEPRINCIPAL PAYMENTPRIVATE FINANCINGPRIVATE PARTYPROPERTY RIGHTSPROVISIONSPRUDENTIAL REGULATIONPUBLICPUBLIC AGENCIESPUBLIC DEBTPUBLIC FINANCEPUBLIC FUNDSPUBLIC GOODSPUBLIC INFRASTRUCTUREPUBLIC MANAGERPUBLIC MANAGERSPUBLIC PRIVATE PARTNERSHIPSPUBLIC PROJECTSPUBLIC PROVISIONPUBLIC SECTORPUBLIC TOLL ROADSPUBLIC TRANSPORTATIONPUBLIC WORKSREGULAR PAYMENTSRENEGOTIATIONSRESERVERETURNRETURNSREVENUE COLLECTIONRISK MANAGEMENTRISK SHARINGROADROAD EXPENDITURESROAD USERSROADSROUND TRIPROUTESAVINGSSERVICE PROVIDERSSETTLEMENTSHAREHOLDERSSPRAWLSTREET MAINTENANCESTREETSTAXTAX REVENUETAX REVENUESTOLLTOLL INCREASESTOLL MOTORWAYSTOLL REVENUESTOLL ROADTOLL ROADSTOLL SCHEDULETOLLSTRAFFICTRAFFIC GROWTHTRANSFER RISKSTRANSPORT INFRASTRUCTURETRANSPORT INVESTMENTSTRANSPORT POLICYTRANSPORTATIONTRANSPORTATION AUTHORITYTRANSPORTATION PROJECTSTRANSPORTATION RESEARCHTRUETUNNELSURBAN HIGHWAYSURBAN LIFEURBAN PLANNERSURBAN ROADURBAN ROAD CAPACITYURBAN ROAD CAPACITY POLICYURBAN TRANSPORTUSER CHARGESVALUATIONVEHICLEVEHICLE TRIPS10.1596/1813-9450-6873