Ganuza, Juan-JoséLlobet, GerardUniversitat Pompeu Fabra. Departament d'Economia i Empresa2020-05-252020-05-252019-11-29http://hdl.handle.net/10230/44790This paper shows that the concession model discourages firms from acquiring information about the future profitability of a project. Uninformed contractors carry out good and bad projects because they are profitable in expected terms even though it would have been optimal to invest in screening them out according to their value. White elephants are identified as avoidable negative net present-value projects that are nevertheless undertaken. Institutional arrangements that limit the losses that firms can bear exacerbate this distortion. We characterize the optimal concession contract, which fosters the acquisition of information and achieves the first best by conditioning the duration of the concession to the realization of the demand and includes payments for not carrying out some projects.application/pdfengL'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative CommonsThe simple economics of white elephants<resourceType xmlns="http://datacite.org/schema/kernel-3" resourceTypeGeneral="Other">info:eu-repo/semantics/workingPaper</resourceType><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">concession contracts</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">information acquisition</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">flexible-term concessions.</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">Business Economics and Industrial Organization</subject><rights xmlns="http://datacite.org/schema/kernel-3">info:eu-repo/semantics/openAccess</rights>