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Renegotiation in Public-Private Partnerships: An Incentive Mechanism Approach.

Renegotiation in Public-Private Partnerships: An Incentive Mechanism Approach.

Authors :
Russo, Julio Cezar
Dias, Marco Antonio Guimarães
Barreira da Silva Rocha, André
Cyrino Oliveira, Fernando Luiz
Source :
Group Decision & Negotiation; Dec2018, Vol. 27 Issue 6, p949-979, 31p
Publication Year :
2018

Abstract

Game theory is an important analytical tool for measuring problems caused by behaviors that deviate from contractual ethics. However, the PPP literature still does little to explore this research topic. This paper analyzes and improves the equilibrium conditions of a renegotiation model of PPPs by introducing the asymmetry of information in the contract. To achieve this goal, the Mechanism Design Theory is used to demonstrate how the correct tracking of the investor directly influences the payoffs of the renegotiation. The study concludes that the lack of incentive constraints in the bidding document, as an ex ante condition, does not provide sufficient information on investor management capability. In this way, this information is only revealed in the renegotiation phase. Consequently, this contract failure results in high political costs to the government due to excessive subsidies. [ABSTRACT FROM AUTHOR]

Details

Language :
English
ISSN :
09262644
Volume :
27
Issue :
6
Database :
Complementary Index
Journal :
Group Decision & Negotiation
Publication Type :
Academic Journal
Accession number :
133020086
Full Text :
https://doi.org/10.1007/s10726-018-9586-6