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How to Design Infrastructure Contracts in a Warming World? A Critical Appraisal of Public-Private Partnerships

Martimort, David and Straub, Stéphane (2012) How to Design Infrastructure Contracts in a Warming World? A Critical Appraisal of Public-Private Partnerships. TSE Working Paper, n. 12-315

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Official URL: http://tse-fr.eu/pub/25892

Abstract

We analyze how uncertainty regarding future climate conditions affects the design of concession contracts, organizational forms and technological choices in a principal-agent context with dynamic moral hazard, limited liability and irreversibility constraints. The prospect of future, uncertain productivity shocks on the returns on the firm’s effort creates an option value of delaying efforts which exacerbates agency costs. Contracts and organizational forms are drafted to control this cost of delegated flexibility. Our analysis is relevant for infrastructure sectors that are sensitive to changing weather conditions and sheds a pessimistic light on the relevance of Public-Private Partnerships in this context.

Item Type: Monograph (Working Paper)
Language: English
Date: 11 May 2012
JEL codes: D82 - Asymmetric and Private Information
L32 - Public Enterprises
Q54 - Climate; Natural Disasters
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 09 Jul 2014 17:26
Last Modified: 02 Oct 2019 23:01
OAI ID: oai:tse-fr.eu:25892
URI: http://publications.ut-capitole.fr/id/eprint/15312

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