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Political accountability, incentives, and Contractual design of public private partnerships

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Author Info
Athias, Laure

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Abstract

This paper studies political accountability under various contractual forms of Public Private Partnerships. A critical aspect of any PPP contract is the allocation of demand risk between the public authority and the private provider. We show that contracts in which the private provider bears all demand risk motivate more the public authority from responding to customer needs, since they empower consumers, which provides the public authority with more credibility in side-trading. The policy implication is that the current greater resort to contracts in which the public authority retains all demand risk may not be optimal in terms of allocative efficiency.

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File URL: http://mpra.ub.uni-muenchen.de/10538/
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File URL: http://mpra.ub.uni-muenchen.de/17089/
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Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 10538.

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Date of creation: 02 Dec 2007
Date of revision: 11 Mar 2009
Handle: RePEc:pra:mprapa:10538

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Related research
Keywords: Political accountabiliy; Public services provision; Public Private Partnerships; Incomplete contracts; Consumers empowerment.;

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Find related papers by JEL classification:
D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
H10 - Public Economics - - Structure and Scope of Government - - - General
L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Hart, Oliver & Shleifer, Andrei & Vishny, Robert W, 1997. "The Proper Scope of Government: Theory and an Application to Prisons," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1127-61, November.
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  2. Timothy Besley & Robin Burgess, 2002. "The Political Economy Of Government Responsiveness: Theory And Evidence From India," The Quarterly Journal of Economics, MIT Press, vol. 117(4), pages 1415-1451, November. [Downloadable!] (restricted)
    Other versions:
  3. Timothy Besley & Maitreesh Ghatak, 2001. "Government Versus Private Ownership Of Public Goods," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1343-1372, November. [Downloadable!] (restricted)
    Other versions:
  4. Skamris, Mette K. & Flyvbjerg, Bent, 1997. "Inaccuracy of traffic forecasts and cost estimates on large transport projects," Transport Policy, Elsevier, vol. 4(3), pages 141-146, July. [Downloadable!] (restricted)
  5. Eduardo Engel & Ronald Fischer & Alexander Galetovic, 2007. "The Basic Public Finance of Public-Private Partnerships," Documentos de Trabajo 234, Centro de Economía Aplicada, Universidad de Chile. [Downloadable!]
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  6. Matthew Ellman, 2006. "Does Privatising Public Service Provision Reduce Accountability?," Economics Working Papers 997, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
  7. Bennett, John & Iossa, Elisabetta, 2006. "Building and managing facilities for public services," Journal of Public Economics, Elsevier, vol. 90(10-11), pages 2143-2160, November. [Downloadable!] (restricted)
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  8. Eduardo Engel & Ronald Fischer & Alexander Galetovic, 2005. "Privatizing Highways in the United States," Documentos de Trabajo 209, Centro de Economía Aplicada, Universidad de Chile. [Downloadable!]
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  9. Athias, Laure & Nuñez, Antonio, 2008. "Winner's curse in toll road concessions," Economics Letters, Elsevier, vol. 101(3), pages 172-174, December. [Downloadable!] (restricted)
  10. Antonio Estache, 2006. "PPI Partnerships vs. PPI Divorces in LDCs," Review of Industrial Organization, Springer, vol. 29(1), pages 3-26, September. [Downloadable!] (restricted)
  11. Grout, Paul A, 1997. "The Economics of the Private Finance Initiative," Oxford Review of Economic Policy, Oxford University Press, vol. 13(4), pages 53-66, Winter.
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Cited by:
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  1. Elisabetta Iossa & David Martimort, 2008. "The Simple Micro-Economics of Public-Private Partnerships," CEIS Research Paper 139, Tor Vergata University, CEIS, revised 19 Dec 2008. [Downloadable!]
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