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Efficient Public-Private Capital Structures

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  • Moszoro, Marian

Abstract

This paper presents a rationale for hybrid public-private capital structures in public utilities. The public sector can borrow money cheaper, while private investors can spawn life-cycle cost savings. When investment vehicles enable the internalization of the financial advantage of the public sector and the managerial advantage of the private sector, a Pareto-efficient capital structure is achieved with both the public and private parties as shareholders. I show how different knowledge transfer schemes determine the optimal shareholding structure for the utility company.

Suggested Citation

  • Moszoro, Marian, 2014. "Efficient Public-Private Capital Structures," MPRA Paper 102713, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:102713
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    Cited by:

    1. Suk Hyun & Donghyun Park & Shu Tian, 2018. "Determinants of Public–Private Partnerships in Infrastructure in Asia: Implications for Capital Market Development," Working Papers id:12887, eSocialSciences.
    2. Hyun, Suk & Park, Donghyun & Tian, Shu, 2018. "Determinants of Public–Private Partnerships in Infrastructure in Asia: Implications for Capital Market Development," ADB Economics Working Paper Series 552, Asian Development Bank.
    3. N.F. Cruz & R.C. Marques & A. Marra & C. Pozzi, 2014. "Local Mixed Companies: The Theory And Practice In An International Perspective," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 85(1), pages 1-9, March.
    4. Moszoro, Marian, 2017. "Regulation Costs and Private-Sector Know-How Spillovers of Public-Private Partnerships," Working Papers 07608, George Mason University, Mercatus Center.
    5. Deng, Zhongqi & Song, Shunfeng & Chen, Yongjun, 2016. "Private participation in infrastructure project and its impact on the project cost," China Economic Review, Elsevier, vol. 39(C), pages 63-76.
    6. Julie de Brux & Frédéric Marty, 2014. "IPPP – Risks and opportunities An economic perspective," Working Papers hal-03470399, HAL.
    7. Antonio Estache & Tomas Serebrisky & Liam Wren-Lewis, 2015. "Financing infrastructure in developing countries," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 31(3-4), pages 279-304.
    8. Jing Du & Hongyue Wu & Ruoyu Jin, 2019. "Capital Structure of Public–Private Partnership Projects: A Sustainability Perspective," Sustainability, MDPI, vol. 11(13), pages 1-25, June.
    9. Fusheng Xie & Lei Hang, 2022. "A Game-Theory-Based Interaction Mechanism between Central and Local Governments on Financing Model Selection in China," Sustainability, MDPI, vol. 14(16), pages 1-18, August.
    10. Dementiev, Andrei, 2016. "Strategic partnerships in local public transport," Research in Transportation Economics, Elsevier, vol. 59(C), pages 65-74.
    11. Xuemeng Guo & Bingyao Chen & Yuting Feng, 2022. "Public-Private Partnership Transportation Investment and Low-Carbon Economic Development: An Empirical Study Based on Spatial Spillover and Project Characteristics in China," Sustainability, MDPI, vol. 14(15), pages 1-22, August.
    12. Patrick Omoruyi Eke & Alexander Ehimare Omankhanlen, 2019. "Public-Private Partnership and Financial Structure Development: Cointegration Lessons for selected sub-Sahara African Economies," Annals of Economics and Finance, Society for AEF, vol. 20(2), pages 783-802, November.
    13. Jing Du & Hongyue Wu & Xianbo Zhao, 2018. "Critical Factors on the Capital Structure of Public–Private Partnership Projects: A Sustainability Perspective," Sustainability, MDPI, vol. 10(6), pages 1-27, June.
    14. D'Amore, Gabriella & Landriani, Loris & Lepore, Luigi, 2021. "Ownership and sustainability of Italian water utilities: The stakeholder role," Utilities Policy, Elsevier, vol. 71(C).
    15. Moszoro Marian W., 2018. "Public–Private Monopoly," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 18(2), pages 1-15, April.
    16. Bingyao Chen, 2021. "Public–Private Partnership Infrastructure Investment and Sustainable Economic Development: An Empirical Study Based on Efficiency Evaluation and Spatial Spillover in China," Sustainability, MDPI, vol. 13(15), pages 1-20, July.
    17. Po shan Yu & Zuo zhang Chen & Jin Sun, 2018. "Innovative Financing: An Empirical Study on Public–Private Partnership Securitisation in China," Australian Economic Papers, Wiley Blackwell, vol. 57(3), pages 394-425, September.
    18. Sanford V. Berg & Makoto Okamura & Haruka Yane & Shinji Yane, 2022. "Efficient performance by companies with mixed ownership: Privatization and divestiture of a vertically integrated public monopoly," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 93(3), pages 717-730, September.
    19. repec:hal:spmain:info:hdl:2441/3n1h5ijlcf80v9csi63s61fdvk is not listed on IDEAS

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    More about this item

    Keywords

    Public-Private Partnerships; Ownership Structures; Public Investment Policy; Knowledge Transfer; Water Utilities;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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