Anne Yvrande-Billon
U. of Paris 1

Yvrande-Billon

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(Thursday, 1st January 2004)

Title : Institutional Design and Contractual Arrangements

For two decades, the procurement of public services (e.g. transport, water supply, energy, telecommunications) has been engaged in a process of intensive changes, particularly in Europe, where the reforms of network industries represent a decisive step toward the construction of a unique market. Both at the local and national levels, public authorities have been willing to introduce new regulatory regimes and to modify the existing governance structures of utilities. In this context of reforms, franchising public services is often seen as a tool of decision makers to allow private sector participation, introduce ex ante competition and therefore improve the performances of network industries while retaining some degree of control. However, at the theoretical level, many questions arise about the practicability and efficiency of this form of governance for providing public services. According to incomplete contract theories, granting concessions to the private sector for the right to operate a public service can be an efficient alternative to public procurement only under certain institutional and transactional conditions that this workshop intends to review. The presentation of several experiences of utilities reforms will then give the opportunity to the workshop participants to appreciate the relevance of the theoretical propositions.

Bibliographical references :

Keith J. Crocker and Scott E. Masten 1996Regulation and Administered Contracts Revisited: Lessons from Transaction-Cost Economics for Public Utility Regulation”, Journal of Regulatory Economics 9, 5-39.

Stephen C. Littlechild 2002Competitive Bidding for a Long-Term Electricity Distribution Contract”, Review of Network Economics 1(1), 1-38.

Jose L. Guasch, Jean-J. Laffont and Stéphane Straub 2003Renegotiation of Concession Contracts in Latin America , Policy Research Working Paper 3011, The World Bank.