publication . Preprint . Article . 2010

Infrastructure investment and incentives with supranational funding

Ginés de Rus; M. Pilar Socorro;
Open Access
  • Published: 03 Jun 2010
Abstract
Public infrastructure investment is usually co-financed by supranational organizations. The selection of projects is supposed to be decided using the information provided by conventional cost-benefit analysis. Nevertheless, we show that the type of institutional design regarding the financing mechanism affects the incentives of national governments to reduce costs and increase revenues, affecting project selection, the infrastructure capacity, the choice of technology, and the type of contract used for the construction and operation of projects. With a total cost-plus financing mechanism there is no incentive in being efficient and the price charged for the use ...
Subjects
free text keywords: Development, European integration, Critical infrastructure, Entrepreneurship, International trade, business.industry, business, Fixed price, Revenue, Finance, Incentive, Economics, Social policy, Public infrastructure

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