Financing Infrastructure in the Shadow of Expropriation / Viral V. Acharya, Cecilia Parlatore, Suresh Sundaresan.

Format:

Book

Author/Creator:

Acharya, Viral V.

Contributor:

National Bureau of Economic Research.

Parlatore, Cecilia.

Sundaresan, Suresh.

Series:

Working Paper Series (National Bureau of Economic Research) no. w30131.

NBER working paper series no. w30131

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2022.

Summary:

We examine the optimal financing of infrastructure when governments have limited financial commitment and can expropriate rents from private sector firms that manage infrastructure. While private firms need incentives to implement projects well, governments need incentives to limit expropriation. This double moral hazard limits the willingness of outside investors to fund infrastructure projects. Optimal financing involves government guarantees to investors against project failure to incentivize the government to commit not to expropriate which improves private sector incentives and project quality. The model captures several other features prevalent in infrastructure financing such as government co-investment, tax subsidies, development rights, and cross-guarantees.

Notes:

Print version record

June 2022.