We study the effects of a country’s propensity to renegotiate transportation infrastructure contracts on the technical efficiency of the firms they attract. Firms are characterized by their ability to lobby and by their technical efficiency. In equilibrium, countries with a higher propensity...

In this paper we show that fixed-term contracts, which are commonly used to franchise highways, do not allocate demand risk optimally. We characterize the optimal risk-sharing contract and show that it can be implemented with a fairly straightforward mechanisma least-present-value-of-revenue...