An Economic Analysis of the Closure of Markets and other Dysfunctions in the Awarding of Concession Contracts

15-06-2012

As concession contracts are long-term agreements that are inherently incomplete, the economic literature suggests that rigid award rules are inadequate. We suggest that the Directive for the awarding of concession contracts should contain a balanced mix of flexible and rigid rules, as well as procedures to increase the transparency and accountability of contracting parties. This briefing note provides suggestions in order to avoid the closure of markets and other dysfunctions in the awarding of concession contracts.

As concession contracts are long-term agreements that are inherently incomplete, the economic literature suggests that rigid award rules are inadequate. We suggest that the Directive for the awarding of concession contracts should contain a balanced mix of flexible and rigid rules, as well as procedures to increase the transparency and accountability of contracting parties. This briefing note provides suggestions in order to avoid the closure of markets and other dysfunctions in the awarding of concession contracts.