Highway to Sell

Abstract

Motivated by the forthcoming terminations of most highways concessions in France, we propose a versatile model of dynamic regulation and contract renewals that describes a long-term relationship between the public authority and an incumbent operator with private information about its costs that may face potential entrants. We discuss various issues including the nature of discriminatory biases towards entrants, their consequences on investments, the public or private nature of the management of concessions, the role of the operator's financial constraints, the consequences of allotments. So doing, we isolate a few principles that should guide policy-makers when deciding upon concession renewals.

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Reference

Philippe Bontems, Marie-Françoise Calmette, and David Martimort, “Highway to Sell”, TSE Working Paper, n. 25-1652, July 2025.