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Public–private partnerships versus traditional procurement: An experimental investigation

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Author Info

  • Hoppe, Eva I.
  • Kusterer, David J.
  • Schmitz, Patrick W.

Abstract

A government agency wants an infrastructure-based public service to be provided. Our experimental study compares two different modes of provision. In a public–private partnership, the two tasks of building the infrastructure and operating it are delegated to one private contractor (a consortium), while under traditional procurement, these tasks are delegated to separate contractors. We find support for the theoretical prediction that, compared to traditional procurement, a public–private partnership provides stronger incentives to make cost-reducing investments (which may increase or decrease service quality). In two additional treatments, we study governance structures which explicitly take subcontracting within private consortia into account.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 89 (2013)
Issue (Month): C ()
Pages: 145-166

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Handle: RePEc:eee:jeborg:v:89:y:2013:i:c:p:145-166

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Web page: http://www.elsevier.com/locate/jebo

Related research

Keywords: Public–private partnerships; Procurement; Incomplete contracts; Experiment;

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References

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Citations

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Cited by:
  1. Feng, Zhuo & Zhang, Shui-Bo & Gao, Ying, 2014. "On oil investment and production: A comparison of production sharing contracts and buyback contracts," Energy Economics, Elsevier, vol. 42(C), pages 395-402.
  2. Schmitz, Patrick W., 2012. "Job design with conflicting tasks reconsidered," MPRA Paper 36914, University Library of Munich, Germany.
  3. Luciano Greco, 2012. "Imperfect Bundling In Public-Private Partnerships," "Marco Fanno" Working Papers 0147, Dipartimento di Scienze Economiche "Marco Fanno".
  4. Julie Brux & Claudine Desrieux, 2014. "To allot or not to allot public services? An incomplete contract approach," European Journal of Law and Economics, Springer, vol. 37(3), pages 455-476, June.
  5. Takeshi Nishimura, 2012. "Bundling Decision in Procurement Auctions with Risk-Averse Suppliers," Global COE Hi-Stat Discussion Paper Series gd12-237, Institute of Economic Research, Hitotsubashi University.

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