Public-private partnerships (PPPs) are increasingly used to provide infrastructure services. Even though PPPs have the potential to increase efficiency and improve resource allocation, contract renegotiations have been pervasive. We show that existing accounting standards allow governments to...

Public-private partnerships (PPPs) have been justified because they release public funds or save on distortionary taxes. However, the resources saved by a government that does not finance the upfront investment are offset by giving up future revenue flows to the concessionaire. If a PPP can be...

While some countries have unbundled distribution and retailing, skeptics argue that the physical attributes of electricity make retailers redundant. Instead, it is claimed that passive pass through of wholesale prices plus regulate charges for transmission and distribution success for customers...

Infrastructure concessions are frequently renegotiated after investments are sunk, resulting in better contractual terms for the franchise holders. This paper offers a political economy explanation for renegotiations that occur with no apparent holdup. We argue that they are used by political...

We quantify the intertemporal impact of a renewable quota on CO2 emissions, pollution and welfare. We find that the quota substitutes investments in base load technologies. Therefore, its environmental benefit depends on the emission intensity factors of base load technologies, not on system...

This paper reviews the Latin American experience with highway privatization during the last decade. Based on evidence from Argentina, Colombia and Chile, we find that private financing of new highways freed up fewer public resources than expected because public funds were often diverted to bail...

This paper analyses the foundations of efficient-firm regulation (implemented in Chile for almost two decades), and the formulas that are used to set the prices of water/sanitation companies, electric power distributors and the dominant phone companies. We show that efficient-firm regulation...

When the La Niña drought hit Chile in 1998-99, the country's recently reformed electricity sector suffered a price collapse. Power outages followed but were they inevitable? No. The electricity shortage can be blamed on the rigid price system and deficient regulatory governance. In the early...

The main problem with road provision in developing countries is lack of maintenance, which leads to increased transportation costs. Other important problems are the inefficient choice of projects and excessive costs of construction. To a large extent, these problems are due to a poor...

Public-private partnerships (PPPs) cannot be justified because they free public funds. When PPPs are desirable because the private sector is more efficient, the contract that optimally trades demand risk, user-fee distortions and the opportunity cost of public funds is characterized by a minimum...