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The Chilean Infrastructure Concessions Program: Evaluation, Lessons and Prospects for the Future

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  • Eduardo Engel
  • Ronald Fischer
  • Alexander Galetovic

Abstract

This paper describes and evaluates the Chilean infrastructure concessions program, which is one of the main economic innovations carried out by the center-left coalition of political parties that has governed Chile since the return to democracy in 1990. The main principles underlying the economics of franchising are discussed and used to evaluate the program, thereby reviewing the privatizations of highways and seaports in detail. Compared with experiences in other countries, the results are promising. The infrastructure deficit has been greatly reduced, innovative ideas have been used successfully and several pitfalls have been avoided. However, since franchise terms are long, the final verdict will not be in for at least a decade. We offer various suggestions to increase the likelihood of a positive outcome. We believe implementing these suggestions would lead to important savings for taxpayers and users.

Suggested Citation

  • Eduardo Engel & Ronald Fischer & Alexander Galetovic, 1999. "The Chilean Infrastructure Concessions Program: Evaluation, Lessons and Prospects for the Future," Documentos de Trabajo 60, Centro de Economía Aplicada, Universidad de Chile.
    • Handle: RePEc:edj:ceauch:60
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    References listed on IDEAS

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    1. Eduardo M. R. A. Engel & Ronald D. Fischer & Alexander Galetovic, 2001. "Least-Present-Value-of-Revenue Auctions and Highway Franchising," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 993-1020, October.
    2. Michael Klein, 1998. "Rebidding for Concessions," World Bank Publications - Reports 11524, The World Bank Group.
    3. Harstad, Ronald M & Crew, Michael A, 1999. "Franchise Bidding without Holdups: Utility Regulation with Efficient Pricing and Choice of Provider," Journal of Regulatory Economics, Springer, vol. 15(2), pages 141-163, March.
    4. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, April.
    5. Economides, Nicholas, 1998. "The incentive for non-price discrimination by an input monopolist," International Journal of Industrial Organization, Elsevier, vol. 16(3), pages 271-284, May.
    6. Engel, Eduardo & Fischer, Ronald & Galetovic, Alexander, 1997. "Highway Franchising: Pitfalls and Opportunities," American Economic Review, American Economic Association, vol. 87(2), pages 68-72, May.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Alberto Chong & Florencio de, 2003. "The Truth about Privatization in Latin America," Yale School of Management Working Papers ysm436, Yale School of Management.
    2. Antonio Estache & J.L. Guasch & Lourdes Trujillo, 2003. "Price caps, efficiency pay-offs and infrastructure contract renegotiation in Latin America," ULB Institutional Repository 2013/44100, ULB -- Universite Libre de Bruxelles.
    3. Ancor Suárez-Alemán & Tomás Serebrisky & Oscar Ponce de León, 2018. "Port reforms in Latin America and the Caribbean: where we stand, how we got here, and what is left," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 20(4), pages 495-513, December.
    4. Andres Pereyra, 2008. "Asignación de riesgos en concesiones viales: evaluación de la aplicación de mecanismos de mitigación de riesgos en contratos de concesión en Uruguay," Documentos de Trabajo (working papers) 2008, Department of Economics - dECON.
    5. Andrés Pereyra, 2006. "Alternativas en el manejo del riesgo de demanda en concesiones de infraestructura vial," Documentos de Trabajo (working papers) 2206, Department of Economics - dECON.

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