Core References

• Understanding Regulation: Theory, Strategy, and Practice New York: Oxford University Press, 1999, Chapter 20. Baldwin, Robert, and Martin Cave

  Examines both commercial and government franchising. Discusses methods of allocating franchises, such as auctions, and problems with franchises. Problems include specifying the franchised service, ensuring efficient competition for the market, enforcement, and terminating contracts.

• Franchising and Privatization Note no. 40 in Public Policy for the Private Sector. Washington, D.C.: World Bank Group, 1995. Dnes, Antony W.

  Explains that franchise bidding is one way of having competition for the market when the market exhibits natural monopoly characteristics. Holds that the scheme can provide low prices for customers if the bid is for retail prices that will be charged.

• Granting and Renegotiating Infrastructure Concessions: Doing It Right Washington, D.C.: The World Bank Group, 2004, Chapters 2 and 7, Chapters 1-2. Guasch, J. Luis

  Provides an overview of concessions, including how they work, benefits, drawbacks, and experiences.

• Managing the Regulatory Process: Design, Concepts, Issues, and the Latin America and Caribbean Story Washington, D.C.: The World Bank Group, 1999, Chapters 8-9. Guasch, J. Luis, and Pablo Spiller

  Examines franchising and concessions. Examines cases in Argentina, Mexico, and Chile. Describes how to design concession arrangements.

• Concessions – The Way to Privatize Infrastructure Sector Monopolies. Note no. 59 in Public Policy for the Private Sector. Washington, D.C.: World Bank Group, 1995. Guislain, Pierre, and Michel Kerf

  States that concession-type arrangements can be used for privatizing sectors with monopoly characteristics. Under this approach, the government grants the private sector the right to provide the utility service, but retains some control through a concession contract or license. The continuum of private participation options ranges from short-term supply and service contracts to concessions to full privatization.

Sectoral References

TRANSPORTATION

• Regulatory Reform, Competition, and Innovation – A Case Study of the Mexican Road Freight Industry Policy Research Working Paper number 2318, World Bank, Washington, D.C., 2000. Dutz, Mark, Aydin Hayri, and Pablo Ibarra

  Case study of Mexico of how innovations in road freight services affect selected downstream users of those services after regulatory reform.

• Toolkit on Public-Private Partnerships in Highways Public-Private Infrastructure Advisory Facility, World Bank. Groupe Egis and Courdert Brothers

  Provides low- and middle- income countries guidance in the design and implementation of Public-Private Partnerships in the highway sector. Covers all types of road projects and both with and without private funding.

• Urban Bus Toolkit: Tools and Options for Reforming Urban Bus Systems Public-Private Infrastructure Advisory Facility, World Bank. CPCS Transcom

  Provides guidance on evaluating existing and alternative urban bus systems in developing and transitional countries. Offers practical advice to enact fundamental system reforms.

WATER

• Water Sector Contracts in Mexico City, Mexico in Thirsting for Efficiency: The Economics and Politics of Urban Water System Reform, Washington, D.C.: The World Bank, 2002, pp. 139-187. Haggarty, Luke, Penelope Brook, and Ana Maria Zuluaga

  Describes water service contracts in Mexico. Illustrates the use of multiple operators to provide competitive pressure. Considers the motivations for the water sector reforms, the policy decisions, and policy changes.

• Improving Water Services through Competition Note no. 164 in Public Policy for the Private Sector. Washington, D.C.: World Bank Group, December 1998. Webb, M., and Ehrhardt, D.

  States that many major water sector reforms in recent years have used competition for the market as an efficient way of introducing private sector participation, and the approach has delivered benefits to consumers. Holds that competition forces the bidders to reveal the minimum cost of providing water and sanitation, allowing efficiency gains to be realized and passed on to consumers. Competition for the market can be combined with other forms of competition. Requiring the concessionaire to contract out many services can keep up the pressure for efficiency during long-term contracts. And comparative competition between the concessionaire and other utilities can boost performance.

Other References

• Privatization: An Economic Analysis Cambridge, MA: MIT Press, 1988, Chapter 3. Vickers, John, and George Yarrow

  Describes the effects of competition.

Key Words

Competition for the market, Monopoly, Franchise