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Partenariats public-privé et investissements de fin de contrat : le cas de l'industrie de l'eau en France

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  • Eshien Chong
  • Freddy Huet

Abstract

The efficiency of franchise bidding schemes for network industries has been challenged by many authors. One of the problems with this kind of schemes concerns the lack of investment?s incentives of the incumbent at the end of the contract. The goal of this article is twofold. First, we explain why the French water industry is rather characterized by investment incentives problems of incumbents toward the end of the contract. Second, using a database collected on a sample of 5000 municipalities in France in 2001, we propose some econometric tests emphasizing that in the French water sector, private firms have less and less incentives to invest as the end of the contract arrives. More precisely, we show using our data that a solution adopted by local authorities to face this problem is to substitute for private firms for the specific investments that must be made at the end of the contract. Our results therefore confirm the proposition generally admitted by contract theory of under-investment risks of incumbents at the end of the franchise bidding agreement. JEL Classification: D23, L51, L95.

Suggested Citation

  • Eshien Chong & Freddy Huet, 2010. "Partenariats public-privé et investissements de fin de contrat : le cas de l'industrie de l'eau en France," Recherches économiques de Louvain, De Boeck Université, vol. 76(4), pages 413-448.
    • Handle: RePEc:cai:reldbu:rel_764_0413
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    More about this item

    Keywords

    franchise bidding; under investment; water industry;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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