| | We derive the optimal concession contract for
an airport where the concessionaire’s effort impacts either non-aeronautical
revenue (shops, restaurantes, parking lots and hotels) or aeronautical revenues
(passenger and airline fees). Our first model assumes that demand for the
infrastructure is exogenous whereas demand for non-aeronautical services
depends both on passenger flow and on the concessionaire’s effort and
diligence. We show that the optimal principal-agent contract separates
exogenous and endogenous risks. First, the term of the concession varies
inversely with passenger flow, so that the concessionaire bears no exogenous demand
risk. Second, the concessionaire bears part or all of non-aeronautical risk,
which fosters effort. We also study a model where the concessionaire’s effort affects
demand for aeronautical services and focus on the case where the contract
includes a demand trigger for investment as an incentive. Both optimal
contracts can be implemented with a Present-Value-of-Revenue (PVR) auction in
which firms bid on the present value of aeronautical revenue and the concession
ends when the bid is collected. These auctions have been used to auction
airport PPP contracts in Chile, and demand triggers for investment have been
used both in Brazil. JEL: H440, R42 0, L51. |
