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Transaction Costs in Transport Public--Private Partnerships: Comparing Procurement Procedures

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  • Antonio Sánchez Soliño
  • Pilar Gago de Santos

Abstract

In recent years, concern has grown over good practices in the procurement process in public--private partnerships (PPPs). The consensus view is that PPPs are prone to higher transaction costs than traditional public provision. In this paper, we contrast the hypothesis that transaction costs in transport PPPs depend, to a large extent, on the procurement mechanism used in each case, comparing the Negotiated and the Open procedures. Given that PPPs may offer considerable benefits and significant savings over the entire life cycle of the project, it is essential for PPPs to minimize those costs that undermine efficiency gains and that deter private involvement. The quantitative analysis undertaken in this paper highlights that there is room for important savings in the tendering of PPP transport infrastructure projects, using an Open procedure.

Suggested Citation

  • Antonio Sánchez Soliño & Pilar Gago de Santos, 2009. "Transaction Costs in Transport Public--Private Partnerships: Comparing Procurement Procedures," Transport Reviews, Taylor & Francis Journals, vol. 30(3), pages 389-406, May.
    • Handle: RePEc:taf:transr:v:30:y:2009:i:3:p:389-406
    DOI: 10.1080/01441640903037941
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    References listed on IDEAS

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    1. G. Dudkin & T. Välilä, 2006. "Transaction Costs in Public-Private Partnerships: A First Look at the Evidence," Competition and Regulation in Network Industries, Intersentia, vol. 7(2), pages 307-331, June.
    2. Oliver Hart, 2003. "Incomplete Contracts and Public Ownership: Remarks, and an Application to Public-Private Partnerships," Economic Journal, Royal Economic Society, vol. 113(486), pages 69-76, March.
    3. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
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