Impact of alternative concession models on the economic efficiency of road concessions

Throughout the world the development and management of road projects have increasingly involved the private sector under public-private partnerships and concession arrangements. The main reasons are two-fold: increasing the ability to finance road development and increase the efficiency in road operation and management. These models can be structured on two main types of concessions: availability or real tolls. However, there is little evidence on the effects that choosing one or the other has on road efficiency. The goal of this research is to assess if the contract type influences the economic efficiency of the concession and which type of contract leads to higher and lower efficiency. We have used a data set of 23 road concessions in Portugal, and economic and operational data from 2004 to 2016. Our approach also controls for other exogenous factors, such as economic, social or political. Overall, the results show that availability contracts are less efficient, which provides a valuable lesson for academics and practitioners involved in the study and development of road concessions.