Do Regulation and Institutional Design Matter for Infrastructure Sector Performance?

56 Pages Posted: 20 Apr 2016

See all articles by Luis Alberto Andres

Luis Alberto Andres

World Bank

J. Luis Guasch

World Bank - Finance, Private Sector and Infrastructure Sector (LCSFP)

Stéphane Straub

University of Toulouse 1 - Toulouse School of Economics (TSE)

Date Written: October 1, 2007

Abstract

This paper evaluates the impact of economic regulation on infrastructure sector outcomes. It tests the impact of regulation from three different angles: aligning costs with tariffs and firm profitability; reducing opportunistic renegotiation; and measuring the effects on productivity, quality of service, coverage, and prices. The analysis uses an extensive data set of about 1,000 infrastructure concessions granted in Latin America from the late 1980s to the early 2000s. The analysis finds that as the theory indicates, regulation matters. The empirical work here reported shows that in three relevant economic aspects - aligning costs and tariffs; dissuading renegotiations; and improving productivity, quality of service, coverage, and tariffs - the structure, institutions, and procedures of regulation matter. Thus, significant efforts should continue to be made to improve the structure, quality, and institutionality of regulation. Regulation matters for protecting both consumers and investors, for aligning closely financial returns and the costs of capital, and for capturing higher levels of benefits from the provision of infrastructure services by the private sector.

Keywords: Emerging Markets, Debt Markets, Private Participation in Infrastructure, Infrastructure Economics, Infrastructure Regulation

Suggested Citation

Andres, Luis Alberto and Guasch, José Luis and Straub, Stephane, Do Regulation and Institutional Design Matter for Infrastructure Sector Performance? (October 1, 2007). World Bank Policy Research Working Paper Series, Vol. , pp. -, 2007. Available at SSRN: https://ssrn.com/abstract=1023139

Luis Alberto Andres

World Bank ( email )

1818 H Street NW
Washington, DC 20433
United States

José Luis Guasch

World Bank - Finance, Private Sector and Infrastructure Sector (LCSFP) ( email )

1818 H Street, NW
Washington, DC 20433
United States
202 473 8606 (Phone)
202 522 2106 (Fax)

Stephane Straub (Contact Author)

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

21 Allée de Brienne
F-31042 Toulouse Cedex, 31000
France
05 61 12 85 37 (Phone)
05 61 12 85 38 (Fax)

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