Partnership contracts, project finance and information asymmetries: from competition for the contract to competition within the contract?
AbstractPrivate finance has brought to public-private partnerships a third-party overlook on the contracts. Bringing into the appraisal of PPP deals banks and rating agencies results in outsourcing the due diligence of the project to the party best suited to perform it. This reduction in asymmetries of information can occur both in the competition for the market stage or in the competition within the market stage (yardstick competition).At the negotiation stage, funding competition helps to increase the public sector's information on the deal. Of course, the cost of collecting this information should not overweight the savings it induces. In order to maintain competitive pressure through the lifecycle of the project, value testing schemes, as benchmarking or market testing are used. However, they induce concerns about transaction costs and could reduce the certainty about the charge for the public partner.
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Date of creation: 15 Dec 2011
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Publication status: Published - Presented, Seminar of Economic Analysis of Public Law and Policies, Chaire MADP, Sciences Po., Paris, 2011, Paris, France
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Private finance initiative; asymmetries of information; funding competition;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-04-23 (All new papers)
- NEP-COM-2012-04-23 (Industrial Competition)
- NEP-CTA-2012-04-23 (Contract Theory & Applications)
- NEP-PPM-2012-04-23 (Project, Program & Portfolio Management)
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