The value of public private partnerships in infrastructure
AbstractThis 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.
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Bibliographic InfoPaper provided by Swedish National Road & Transport Research Institute (VTI) in its series Working Papers with number 2009:3.
Length: 28 pages
Date of creation: 24 Mar 2009
Date of revision:
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Postal: VTI, Transport Economics, P.O. Box 6056, SE-171 06 Solna, Sweden
Phone: +46-13-20 40 00
Fax: +46-13-14 14 36
Web page: http://www.vti.se/tek
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PPP projects; asymmetric and incomplete contracting; risk; commitment;
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