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The value of public private partnerships in infrastructure

Author

Listed:
  • Nilsson, Jan-Eric

    (VTI)

Abstract

This paper makes three claims. First, in contrast to Public-Private Partnerships (PPP) in many other industries, infrastructure contracts can be conditioned on the delivery of roads and railways of appropriate user quality. This eliminates one of the concerns in the literature of the welfare properties of PPPs. Second, the bundling of investment and maintenance into one single rather than several separate contracts may provide a way to bypass rigidities and contract incompleteness in PPP contracts. Third, having a private concessionaire organising the funding of a PPP project’s investment costs may increase financing costs. This is, however, balanced by the fact that it also enhances the agent’s commitment in long-term incomplete contracts. Taken together, these conclusions point to the possibility of using PPP as an instrument for improving the construction industry’s dismal productivity performance.

Suggested Citation

  • Nilsson, Jan-Eric, 2009. "The value of public private partnerships in infrastructure," Working Papers 2009:3, Swedish National Road & Transport Research Institute (VTI).
    • Handle: RePEc:hhs:vtiwps:2009_003
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    File URL: http://www.transportportal.se/SWoPEc/PPP%205%200.pdf
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    More about this item

    Keywords

    PPP projects; asymmetric and incomplete contracting; risk; commitment;
    All these keywords.

    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy

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