At best, concession agreements are 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 it effectively. By outsourcing the development or exploitation of these resources to others, it is possible to earn more than they could on their own. For example, a country may lack capital and technical capacity to exploit offshore oil reserves. A concession contract with an oil multinational can generate income and jobs for that country. A concession or concession contract is the granting of rights, land or property by a government, a local authority, an entity, a natural person or any other legal person. [1] Concession agreements are sometimes used to exploit other nations. For example, foreign countries and companies forced China to make various concessions in the 19th and early 20th centuries. These concessions have given foreign companies the right to develop and operate railways and ports within China. In addition, citizens of other countries have often appreciated extraterritoriality as part of their concessions. Extraterritoriality meant that foreign laws and tribunals settled disputes between Chinese and foreigners in concessions. Of course, the decisions of these courts have tended to oppose Chinese businesses and consumers. Public services such as water supply can be operated in concessions.

In the case of a public service concession, a private company enters into an agreement with the government on the exclusive right to invest, maintain and carry out activities in a public utility (for example. B a privatization of water) for a number of years. Other forms of contracts between public and private bodies, namely the lease and the management contract (in the water sector, often referred to as farming), are closely linked, but differ from a concession with respect to the operator`s rights and remuneration. A lease gives a company the right to operate and maintain a public service, but investments remain the responsibility of the public. Under a management contract, the operator collects the revenue only on behalf of the government and in turn receives an agreed fee. Article 4 contains a contract for the provision of equipment and services. The list of services should be carefully reviewed and amended to reflect the services that the licensee will actually provide. In the absence of a service charge, the licence fee should include a fee for all services provided by the licensee.