Design of Investment Promotion Policies

Item Type Journal paper
Abstract Over the last 20 years, developing countries have experienced the massive shift of financing and the operation of infrastructure from the public to the private sector. The paper analyzes how the government agency should structure the investment promotion policy. I develop a sequential contracting model between the government, investors and infrastructure providers and derive several properties of the optimal policy. The policy leaves investors uncertain about the project type and prescribes different levels of government support, in the form of tax or price distortions. However, the optimal policy does not change the expectations of investors about distribution of project returns. I characterize how the optimal policy depends on the revenue generation preferences of the government and the profitability of infrastructure projects in the country.
Authors Kartasheva, Anastasia
Journal or Publication Title International Journal of Industrial Organization
Language English
Subjects economics
HSG Classification contribution to scientific community
Refereed Yes
Date 3 May 2011
Publisher Elsevier
Volume 30
Number 2
Page Range 127-136
Number of Pages 10
ISSN 0167-7187
Publisher DOI
Depositing User Prof. Dr. Anastasia Kartasheva
Date Deposited 01 Jul 2020 12:48
Last Modified 03 Aug 2020 12:42


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Kartasheva, Anastasia (2011) Design of Investment Promotion Policies. International Journal of Industrial Organization, 30 (2). 127-136. ISSN 0167-7187

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