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Design of Investment Promotion Policies

Journal
International Journal of Industrial Organization
ISSN
0167-7187
Type
journal article
Date Issued
2011-05-03
Author(s)
Kartasheva, Anastasia  
DOI
https://doi.org/10.1016/j.ijindorg.2011.04.005
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.
Language
English
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Elsevier
Volume
30
Number
2
Start page
127
End page
136
Pages
10
URL
https://www.alexandria.unisg.ch/handle/20.500.14171/94188
Subject(s)

economics

finance

Division(s)

I.VW - Institute of I...

Eprints ID
260532

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