Future challenges for transport infrastructure pricing in PPP arrangements

Author: Macário, R. (2010)

Journal: Research in Transportation Economics 30, 145-154.

Keywords: Public-Private Partnership, Transport infrastructure, Contractual relations, Infrastructure pricing

In this paper we report the conclusion of a research project dedicated to pricing regimes in public-private partnership contracts for the provision of transport infrastructure (Macário et al., 2009). Several elements have been brought to the bulk of knowledge that supports the design and implementation of public-private partnership in the transport sector. These developments have been achieved in the following domain:

• Understand difficulties of price setting within the PPP environment, given the potential conflict of interest among the different parties engaged, go beyond the discussion of first best versus second-best price setting mechanisms.

• Understand the role of government and regulators in the performance of a PPP.

• Translate the issue of asymmetries of information between parties into a risk taking language.

• Devise alternative contractual designs that will enable competitive price setting.

• Understand that a structural element is missing to conciliate the views of the different stakeholders over a PPP: a bridge between infrastructure costs and charges.

The objective of this paper is to overview the main challenges ahead of transport infrastructure pricing, considering the current and likely future policies as well as the field constraints. Moreover, a proposal is formulated to overcome some of the current pitfalls associated to transport infrastructure pricing.