Sharing Risk Through Concession Contracts

Scandizzo Pasquale LucioVentura Marco
CEIS Research Paper
In this paper we model concession contracts between a public and a private party, under dynamic uncertainty arising both from the volatility of the cash flow generated by the project and by the strategic behaviour of the two parties. Under these conditions we derive three notions of equilibrium price and apply the model to a case study for one of the most important concession contracts in Italy.
Number: 166
Keywords: (S) uncertainty modelling; real option; (B) transportation; (P) risk analysis; concession contract;
JEL codes: D81 - L91 - L50
Date: Friday, May 28, 2010
Revision Date: Friday, May 28, 2010