“Recovery Risk and Labor Costs in Public-Private-Partnerships: Contractual Choice in the U.S. Water industry”
AbstractWe use an ordered logistic model to empirically examine the factors that explain varying degrees of private involvement in the U.S. water sector through public-private partnerships. Our estimates suggest that a variety of factors help explain greater private participation in this sector. We find that the risk to private participants regarding cost recovery is an important driver of private participation. The relative cost of labor is also a key factor in determining the degree of private involvement in the contract choice. When public wages are high relative to private wages, private participation is viewed as a source of cost savings. We thus find two main drivers of greater private involvement: one encouraging private participation by reducing risk, and another encouraging government to seek out private participation in lowering costs.
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Bibliographic InfoPaper provided by University of Barcelona, Research Institute of Applied Economics in its series IREA Working Papers with number 201222.
Length: 33 pages
Date of creation: Dec 2012
Date of revision: Dec 2012
Privatization; Public-Private Partnerships; Water; Contracting out. JEL classification: H4; H54; H7; L88; L9;
Find related papers by JEL classification:
- H4 - Public Economics - - Publicly Provided Goods
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
- H7 - Public Economics - - State and Local Government; Intergovernmental Relations
- L88 - Industrial Organization - - Industry Studies: Services - - - Government Policy
- L9 - Industrial Organization - - Industry Studies: Transportation and Utilities
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-01-07 (All new papers)
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