Estache, AntonioIimi, AtsushiRuzzier, Christian2012-03-192012-03-192009-07-01https://hdl.handle.net/10986/4185Infrastructure has particular challenges in public procurement, because it is highly complex and customized and often requires economic, political and social considerations from a long time horizon. To deliver public infrastructure services to citizens or taxpayers, there are a series of decisions that governments have to make. The paper provides a minimum package of important economic theories that could guide governments to wise decision-making at each stage. Theory suggests that in general it would be a good option to contract out infrastructure to the private sector under high-powered incentive mechanisms, such as fixed-price contracts. However, this holds under certain conditions. Theory also shows that ownership should be aligned with the ultimate responsibility for or objective of infrastructure provision. Public and private ownership have different advantages and can deal with different problems. It is also shown that it would be a better option to integrate more than one public task (for example, investment and operation) into the same ownership, whether public or private, if they exhibit positive externalities.CC BY 3.0 IGOADVERSE SELECTIONASSET OWNERSHIPASYMMETRIC INFORMATIONAUCTIONAUCTION DESIGNAUCTIONSBENEFICIARIESBIDBID PRICEBIDDING PROCESSBIDSBULK CARGOCAPITAL INVESTMENTCARRIERSCOMMERCIAL INVESTMENTSCOMPETITION AMONG PORTSCOMPETITIVE BIDDINGCONCESSIONCONCESSION AGREEMENTSCONCESSION CONTRACTSCONCESSIONAIRESCONFLICT OF INTERESTCONFLICTS OF INTERESTCONTRACT ADJUSTMENTCONTRACT ADMINISTRATIONCONTRACT AWARDCONTRACT CLAUSESCONTRACT LEASE CONCESSIONCONTRACT RENEWALCONTRACT THEORYCONTRACTORCONTRACTORSCONTRACTUAL ARRANGEMENTSCONTRACTUAL RELATIONSHIPCOORDINATION FAILURECOST-REIMBURSEMENTCUSTOMER SATISFACTIONDEBTSDEREGULATIONDEVELOPING COUNTRIESDEVELOPMENT BANKDISTRIBUTION COMPANIESDISTRIBUTION FUNCTIONSDISTRIBUTION NETWORKDIVESTITUREECONOMIC COSTSECONOMIC EFFICIENCYEFFICIENT ALLOCATIONEFFICIENT OUTCOMEELECTRICITYELECTRICITY DISTRIBUTIONELECTRICITY SECTORELECTRICITY SECTOR REFORMENERGY MANAGEMENTENERGY SALESFEDERAL PROCUREMENTFINANCIAL PERFORMANCEFINANCIAL STRUCTUREFISCAL DISCIPLINEFRAUDFREIGHTFREIGHT OPERATIONSGENERATIONGOVERNMENT OWNERSHIPGOVERNMENT SUBSIDYHIDDEN ACTIONHIDDEN ACTION PROBLEMHOURS OF SERVICEINCENTIVE MECHANISMSINCENTIVE PAYMENTSINCOMPLETE CONTRACTINCOMPLETE CONTRACTSINFRASTRUCTURE CONCESSIONSINFRASTRUCTURE DEVELOPMENTINFRASTRUCTURE DEVELOPMENT PROJECTSINFRASTRUCTURE PROJECTSINFRASTRUCTURE PROVISIONINFRASTRUCTURE SECTORINFRASTRUCTURE SERVICESINITIAL CONTRACTINSTRUMENTINTERNATIONAL BANKINTERNATIONAL STANDARDSINVESTINGINVESTMENT REQUIREMENTINVESTMENT REQUIREMENTSJOINT VENTUREJOINT VENTURESLACK OF COMPETITIONLACK OF TRANSPARENCYLEASELEASE CONTRACTLEASE CONTRACTSLEASESLEVEL OF COMPETITIONLICENSESLICENSINGLONG-TERM COMMITMENTMACROECONOMIC RISKSMANDATEMARKET RISKMONETARY FUNDMORAL HAZARDNEGATIVE EXTERNALITIESOPTIMAL CONTRACTORIGINAL CONTRACTSOWNERSHIP STRUCTUREPARTICULAR CONTRACTPOLITICAL ECONOMYPORT OPERATIONSPORTSPOSITIVE EXTERNALITIESPOWERPOWER MARKETSPOWER PLANTSPOWER SECTORPRESENT VALUEPRINCIPAL-AGENT MODELPRINCIPAL-AGENT PROBLEMPRINCIPAL-AGENT RELATIONSHIPPRIVATE FINANCEPRIVATE FINANCINGPRIVATE OPERATORSPRIVATE SECTORPRIVATE SECTOR INVOLVEMENTPRIVATE SECTOR PARTICIPATIONPROCUREMENT MECHANISMPROCUREMENT OFFICIALSPROCUREMENT PROCEDUREPROCUREMENT PROCESSPRODUCT QUALITYPROPERTY RIGHTSPROVISION OF INFRASTRUCTUREPROVISIONSPUBLICPUBLIC ASSETSPUBLIC CONTRACTPUBLIC CONTRACTSPUBLIC ECONOMICSPUBLIC FINANCEPUBLIC GOODSPUBLIC INFRASTRUCTUREPUBLIC INVESTMENTPUBLIC OWNERSHIPPUBLIC PRIVATE PARTNERSHIPSPUBLIC PROCUREMENTPUBLIC SAFETYPUBLIC SECTORPUBLIC SECTOR PRODUCTIVITYPUBLIC SERVICESPUBLIC TRANSPORTPUBLIC UTILITYPUBLIC WORKSPUBLIC­PRIVATE PARTNERSHIPSQUALITY REQUIREMENTSRAILRAIL PRIVATIZATIONRAILWAYRAILWAY SECTORRAILWAYSREGULATORY SYSTEMRELATIONAL CONTRACTRENEGOTIATED CONTRACTSRENEGOTIATIONRENEGOTIATIONSRETRENCHMENTRETURNREVENUE GUARANTEESRISK NEUTRALROADROAD CONCESSIONSROLLING STOCKSAFETYSANITATIONSAVINGSSELLERSELLERSSERVICE PROVIDERSEWERAGE SERVICESSOCIAL WELFARESPEEDSSUBCONTRACTORSTARIFF ADJUSTMENTSTELECOMMUNICATIONSTHIRD PARTYTIME REQUIREMENTTRAFFICTRANSACTIONTRANSACTION COSTTRANSACTION COSTSTRANSPARENCYTRANSPORT INFRASTRUCTURETRANSPORT INFRASTRUCTURESTRANSPORT SECTORTRUEUTILITIESVALUATIONSVENDORSVERTICAL INTEGRATIONWATER SUPPLY SERVICESWorld Bank10.1596/1813-9450-4994