Performance of regulatory agencies in road concessions in Brazil: implications of the agent-principal problem

Abstract

Public infrastructure services have been offered by private companies with state participation through sectoral regulatory agencies. However, due the existence of typical problems of Agent-Principal relationship that sign these arrangements, there are questions related to efficient performance of these agencies. In this sense, the objective was to present and discuss the intrinsic characteristics of the performance of the regulatory agencies, and how they are susceptible to political influence and capture problems. It was concluded that despite authorities with financial and administrative independence, there are important points of laxity in the agencies acting regime, especially those ones linked to the nomination / appointment of certain directors from their government and to budget subordination. These aspects indicate the possibility of capture and political influence, which can affect the efficiency in the sector. However, despite lack of reformulation and law enforcement, the performance of the agencies is important for ensuring efficiency because the highway concessions sector in Brazil is concentrated and this may allow the opportunistic behavior of firms and governments at the time of bidding.