Law and Economics and relevant aspects for the exercise of discretionary power by the public sector in determining the duration of public service concessions

Abstract

When deciding to provide a particular public service through a public service concession, the public sector must justify such choice, demonstrating how this is the measure that best suits the public interest underlying the provision of the service. This
justification is linked to the fact that the concession agreement is materialized by acts of the public sector (administrative acts), and will not only refer to the concession itself, but also, consequently, to the terms and parameters under which it will be made. One of these parameters will be the duration of the contract, which, as it is usually long, is often questioned in courts. This article intends to examine aspects relevant to the exercise of discretionary power by the public sector in choosing this duration, assessing whether the public interest involves, in all cases, choosing the minimum duration estimated as necessary for the amortization of investments contractually determined, as is repeatedly pointed out in the literature, or if there are other nuances regarding this duration that should be considered by the government agent responsible for the decision, in terms of the goals, the reasons and the context involved. In order to fulfill this task, law and economics concepts are of great value.