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Innovation and Tariff-adjustment Options in Public-private Partnerships

Author

Listed:
  • Carlos Contreras

    (Universidad Complutense de Madrid (en excedencia))

  • Julio Angulo

    (Independiente)

Abstract

This paper explores the question of whether the inclusion in PPP contracts of options to adjust economic conditions in the face of technological changes may help the adoption of such innovations, while reducing the opportunity cost for governments. In the model proposed a grantor government reserves the right to cut its payments to the concessionaire when the concession’s costs are reduced because of the implementation of technological innovations The paper is of interest given that digital transformation and robotization can generate relevant productivity improvements in areas where a significant part of the public budget is spent, such as healthcare and education services. By adopting a numerical example, this paper illustrates the application of the model to a school concession project.

Suggested Citation

  • Carlos Contreras & Julio Angulo, 2022. "Innovation and Tariff-adjustment Options in Public-private Partnerships," Hacienda Pública Española / Review of Public Economics, IEF, vol. 243(4), pages 51-81, December.
    • Handle: RePEc:hpe:journl:y:2022:v:243:i:4:p:51-81
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Innovation; Public-private Partnerships; Real options; Operating costs.;
    All these keywords.

    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement

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