The more attractive and profitable a concession is, the less likely it is that a government will offer tax advantages and other incentives. Concession contracts are, at best, a form of outsourcing that allows all parties to benefit from comparative advantages. Often, a country or company has resources that lack the knowledge or capital to use them effectively. By externalizing the development or exploitation of these resources to others, it is possible to earn more than they could alone. For example, a country could lack the capital and technical capacity to exploit offshore oil reserves. A concession contract with an oil multinational can generate revenue and jobs for that country. Concession contracts are sometimes used to exploit other nations. For example, foreign countries and companies forced China in the nineteenth and early twentieth centuries. Century, of various concessions. These concessions have given foreign companies the right to develop and operate railways and ports in China. In addition, citizens of other countries often enjoyed extraterritoriality as part of their concessions.
Extraterritoriality meant that foreign laws and courts would settle disputes between Chinese and foreigners in concessions. Of course, the decisions of these courts have tended to oppose Chinese companies and consumers. Genoa was determined to oppose the concession and war broke out. Public services, such as water supply, can be operated as concessions. In the case of a public service concession, a private company enters into an agreement with the government in order to have the exclusive right of a public utility company (e.g.B. a privatization of water) for a number of years, to maintain and make investments. Other forms of contracts between public and private bodies, namely leases and management contracts (often referred to as leasing in the water sector), are closely related, but differ from a concession with regard to the rights of the operator and his remuneration. A lease gives a company the right to operate and maintain a utility, but the investment remains the responsibility of the public. Under a management contract, the operator will only collect revenues on behalf of the government and will in turn receive an agreed fee. If the government provides tax credits to special interest groups, tax credits are an example of a bonus.
Within the European Union, the award of concessions by public bodies is subject to regulation. Construction concessions have been subject to procurement rules for some time, as Directive 2004/18/EC of the European Parliament and of the European Council on public procurement for construction concessions applies and concessions for services of cross-border interest are governed by the principles of the Treaty on the Functioning of the European Union. . . .