Work

Highway Franchising: Pitfalls and Opportunities

Year: 1997

Type: article

Abstract: We build a conceptual framework to analyze the virtues and limitations of alternative mechanisms that can be used to auction a highway. We argue that current mechanisms, which fix the term of the franchise, create unnecesary risk and facilitate post-contract opportunism by the regulator and the franchise-holder. We propose a new mechanism that allocates the franchise to the firm asking the least present value of toll revenue. We argue that this mechanisms is clearly superior to those currently in use.

Source: American Economic Review

Authors: Eduardo Engel, Ronald Fischer, Alexander Galetovic

Language: English

Topic: Auction Theory and Applications

Subfield: Management Science and Operations Research

Field: Decision Sciences

Domain: Social Sciences

SDGs: Industry, innovation and infrastructure, Peace, justice, and strong institutions

Open Access status: green

OpenAlex ID: W1494059846

FWCI: 6.511

Cites: 2

Cited by: 156

Related to: 10