The basic public finance of public-private partnerships

Arbeitspapier

Public-private partnerships (PPPs) cannot be justified because they free public funds. When PPPs are justified on efficiency grounds, the contract that optimally balances demand risk, user-fee distortions and the opportunity cost of public funds, features a minimum revenue guarantee and a revenue cap. However, observed revenue guarantees and revenue sharing arrangements differ from those suggested by the optimal contract. Also, this contract can be implemented via a competitive auction with realistic informational requirements. Finally, the allocation of risk under the optimal contract suggests that PPPs are closer to public provision than to privatization.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Center Discussion Paper ; No. 957

Classification and Topics

• Classification: Wirtschaft ; Taxation and Subsidies: Efficiency; Optimal Taxation ; National Government Expenditures and Related Policies: Infrastructures; Other Public Investment and Capital Stock ; Economics of Regulation ; Transportation Economics: Government and Private Investment Analysis; Road Maintenance, Transportation Planning
• Subject: Bundling ; cost of public funds ; demsetz auction ; minimum revenue guarantees ; privatization ; revenue and profit caps ; scope of government, ; subsidies.

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Engel, Eduardo M. R. A. ; Fischer, Ronald D. ; Galetovic, Alexander
• Event: Veröffentlichung
• (who): Yale University, Economic Growth Center
• (where): New Haven, CT
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/26996
• Last update: 10.03.2025, 11:44 AM CET