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Contract choice, incentives and political capture in public transport services

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Abstract
We consider a framework of contractual interactions between urban transport authorities and transport operators. We estimate simultaneously the choice of contract by the authorities and the effect of regulation on the cost reducing activity of the operators. We test whether regulatory schemes currently implemented in the industry are the observable items of a more general menu of second best contracts. We suggest that the generation process of the data we have in hand is better explained by the political aspects of regulation. Moreover, the cost reducing effort of the operators is greater under fixed-price regimes, compared to the cost-plus case.

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  • Ivaldi, Marc, 2009. "Contract choice, incentives and political capture in public transport services," UC3M Working papers. Economics we096641, Universidad Carlos III de Madrid. Departamento de Economía.
    • Handle: RePEc:cte:werepe:we096641
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    1. Cecile Aubert & Jean- Jacques Laffont, 2005. "Political renegotiation of regulatory contracts," Game Theory and Information 0506002, University Library of Munich, Germany.
    2. Bajari, Patrick & Tadelis, Steven, 2001. "Incentives versus Transaction Costs: A Theory of Procurement Contracts," RAND Journal of Economics, The RAND Corporation, vol. 32(3), pages 387-407, Autumn.
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    Cited by:

    1. Paun Iulian Gabriel, 2017. "The Effects Of The Economic Crisis On European Financial Integration And Economic Growth," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 4, pages 265-274, August.
    2. Xavier d'Haultfoeuille & Philippe Février, 2011. "Identification of a Class of Adverse Selection Models with Contracts Variation," Working Papers 2011-27, Center for Research in Economics and Statistics.

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