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Free Content Maintenance Incentives in Highway Concession Contracts

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In most European countries, the private sector has a direct or indirect participation in the construction, overhaul, maintenance, or operation of highways, normally through concession contracts and often with direct payments (tolls) by users. In this context, we construct a model, where demand also depends on road quality, in order to understand the incentives that a profit-maximising concessionaire has to maintain a highway in proper conditions. We provide an economic rationale for our results and also analyse how they are affected by changes in tolls, costs, and the duration of the concession contract.

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Document Type: Research Article

Publication date: January 1, 2012

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  • JTEP is international both in terms of authors and readership. Since it first appeared, more than 650 papers have been published from Europe, North America, the Pacific Rim/Australasia, Africa, Asia, and South America. This international variety is also reflected in the readership.

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