Sharing Risk Through Concession Contracts
16 Pages Posted: 1 Jun 2010
Date Written: May 31, 2010
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.
Keywords: Uncertainty Modelling, Real Option, Transportation, Risk Analysis, Concession
JEL Classification: D81, L91, L50
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