Towards a Principal-Agent Based Typology of Risks in Public-Private Partnerships
AbstractThere is a strong economic rationale for close cooperation between the public and private sectors. This has resulted in a significant increase in the demand for the provision of public services through instruments combining public and private money such as public-private partnerships (PPPs or P3s). We describe these arrangements and explore how they can be analyzed using standard tools in economics (incentives and principal-agent theory). We discuss the implications of our approach in terms of identifying risks that are often overlooked before turining to the optimal risk-sharing between the public and private partners, in particular with respect to information asymmetries in risk perceptions. This allows us to propose a typology of the risks associated with PPPs, where both internal risks (the risks associated with the contract) and external risks (those associated with the project) are considered.
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Date of creation: 23 Sep 2009
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infrastructure financing; public-private partnerships; principal-agent framework; risk classification; transportation infrastructure; value for money;
Other versions of this item:
- André De Palma & Luc Leruth & Guillaume Prunier, 2012. "Towards a Principal-Agent Based Typology of Risks in Public-Private Partnerships," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(2), pages 57-73.
- AndrÃ© De Palma & Guillaume Prunier & Luc E. Leruth, 2009. "Towards a Principal-Agent Based Typology of Risks in Public-Private Partnerships," IMF Working Papers 09/177, International Monetary Fund.
- NEP-ALL-2009-10-10 (All new papers)
- NEP-CTA-2009-10-10 (Contract Theory & Applications)
- NEP-PBE-2009-10-10 (Public Economics)
- NEP-PPM-2009-10-10 (Project, Program & Portfolio Management)
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