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Private participation in infrastructure project and its impact on the project cost

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  • Deng, Zhongqi
  • Song, Shunfeng
  • Chen, Yongjun

Abstract

While public–private partnerships (PPPs) have become an increasingly popular approach in both developed and developing countries, very little is known about whether or not PPPs are more efficient than pure-public or pure-private modes. Building on some recent work studying PPP issues this paper improves the understanding of public–private capital structures, provides some theoretical considerations as well as empirical evidence that private participation affects PPPs cost through the knowledge-transfer effect and the cost-increase effect, and demonstrates a U-shaped relationship between the project costs and private shares. Empirical analysis also finds that the private shares in China's infrastructure PPPs are excessive, and BOT (build, operate, and transfer) projects, compared to other PPP types, are not efficient in China.

Suggested Citation

  • Deng, Zhongqi & Song, Shunfeng & Chen, Yongjun, 2016. "Private participation in infrastructure project and its impact on the project cost," China Economic Review, Elsevier, vol. 39(C), pages 63-76.
    • Handle: RePEc:eee:chieco:v:39:y:2016:i:c:p:63-76
    DOI: 10.1016/j.chieco.2016.04.004
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    3. E.R. Akhmetshina & O.A. Ignatjeva & I.M. Ablaev, 2017. "Tendencies and Prospects of Public-Private Partnership Development in the Field of Physical Culture and Sport," European Research Studies Journal, European Research Studies Journal, vol. 0(2A), pages 422-430.

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    More about this item

    Keywords

    Public–private partnerships; Capital structure; Knowledge-transfer effect; Cost-increase effect;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures

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