Concession contracts can also be used for risk management. Suppose a country invests a significant amount in the production of a single product. This country will then have a high idiosyncratic risk related to the price of this raw material. For example, the governments of Brazil and Mexico have invested heavily in state-owned oil companies. The value of their assets and income fell significantly when the price of oil fell in 2020. Countries that grant concessions may lose revenue from concession fees, but they do not risk as much capital. For example, there is a concession contract between the French and British governments and two private companies for the Channel Tunnel. British Channel Tunnel Group Limited and France-Manche S.A. operate the Channel Tunnel, often referred to as “Chunnel” under this agreement. The tunnel connects the two countries and allows the transport of passengers and goods between them. It is 31.5 miles long, with 23.5 miles under the English Channel. The underwater tunnel is therefore the longest in the world and an important part of the public infrastructure. The production obtained by the customer through the service provided is at the heart of the service level agreement.
The underlying advantage of cloud computing is that of shared resources that are supported by the underlying nature of a common infrastructure environment. Therefore, SLAs span the entire cloud and are offered by service providers as a service agreement and not a customer-based agreement. Measuring, monitoring, and reporting on cloud performance is based on the final UX or its ability to consume resources. The disadvantage of cloud computing compared to SLAs is the difficulty of determining the cause of service interruptions due to the complexity of the nature of the environment. Concession contracts are sometimes used to exploit other nations. For example, in the nineteenth and early twentieth centuries, foreign countries and companies forced China to grant 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.
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