Chapter 4 The contracting of investment and operation, and the management of infrastructure funding bodies

Public authorities can make a wide variety of institutional arrangements for the provision and operation of infrastructure. What is the best organisation or, to put it more pragmatically, what are the advantages and drawbacks of the various options? This is the question that the present chapter will address, building on the lessons of principal-agent theory and on the analysis of various situations pertinent to the European context. The creation of an infrastructure agency is discussed, and then various modes of transport are reviewed: motorways, railway tracks and seaports. Some numerical values are derived for parameters used in cost-benefit assessments of infrastructure projects.