INCORPORATION OF INCENTIVES IN CONCESSION CONTRACTS THROUGH PUBLIC-PRIVATE PARTNERSHIPS AND THEIR RELATION TO ROAD SAFETY

Abstract

Public-Private Partnerships have emerged as a new model of investment efficiency worldwide. Its growing popularity has been due to its effectiveness in estimating the optimal quality level, maximizing the social benefit (public sector objective), and increasing profits (private sector interest). Importance emerges as an essential factor since 1.3 million people die worldwide due to road accidents. This paper seeks to resolve the question of incorporating incentives in concession contracts through Public-Private Partnerships and improving road safety indicators. Our results show that it is only possible to invest in safety measures when the marginal value provided by the incentive is greater than the cost of the investment. Therefore, governments must know and quantify the social benefits of safety improvements to apply the appropriate stimulus.