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Opportunistic Renegotiation of Infrastructure Concessions as Rent Seeking: The Effect of Legal Systems

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  • Gabriel García Morales

Abstract

This paper examines the problem of renegotiation of infrastructure concessions in Latin America using a model of litigation with an application to incentive contracts. Opportunistic renegotiation is here defined as a rent seeking game, to show the effect of the legal system characteristics in the probability of renegotiation. A main conclusion is that legal systems where each party pays for their own legal expenses, such as the American, are more prone to opportunistic renegotiation. On the other hand, systems, such as the British, that concentrates legal expenses in one party might discourage opportunistic behavior by making it more costly.

Suggested Citation

  • Gabriel García Morales, 2010. "Opportunistic Renegotiation of Infrastructure Concessions as Rent Seeking: The Effect of Legal Systems," Revista Economía y Región, Universidad Tecnológica de Bolívar, vol. 4(2), pages 29-46, December.
    • Handle: RePEc:col:000411:008221
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    File URL: https://revistas.utb.edu.co/index.php/economiayregion/article/view/217
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    References listed on IDEAS

    as
    1. Klein, Daniel B, 1990. "The Voluntary Provision of Public Goods? The Turnpike Companies of Early America," Economic Inquiry, Western Economic Association International, vol. 28(4), pages 788-812, October.
    2. Klein, Daniel, 1990. "The Voluntary Provision of Public Goods? The Turnpike Companies of Early America," University of California Transportation Center, Working Papers qt0js4r8h9, University of California Transportation Center.
    3. Klein, Daniel B., 1990. "The Voluntary Provision of Public Goods? The Turnpike Companies of Early America," University of California Transportation Center, Working Papers qt2587p3z1, University of California Transportation Center.
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    More about this item

    Keywords

    Auctions; fee-shifting; incentives; litigation; public choice; rent seeking;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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