Is the PPP model applicable across sectors?
AbstractFocussing on two key features of a PPP - the bundling of construction and operation of an infrastructure asset, for one, and private ownership for another - this paper argues that the PPP model is suitable for some public services but not for others. While the incentive-oriented mechanism of bundling and private ownership fosters cost savings in the provision of public services, such savings might come at the expense of public-interest objectives, which - after all - set public services apart from private goods and services. The challenge then is to find out whether the conditions for cost savings to outweigh departures from public-interest objectives are more likely to exist for some services than for others. This paper answers affirmatively, putting the ease (or difficulty) of contracting on public services - notably their publicinterest objectives - at the heart of the argument.
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Bibliographic InfoPaper provided by European Investment Bank, Economics Department in its series EIB Papers with number 6/2005.
Length: 21 pages
Date of creation: 06 Jun 2005
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public-private partnerships; economic sectors; incomplete contracts; ownership;
Find related papers by JEL classification:
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
- H40 - Public Economics - - Publicly Provided Goods - - - General
- H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
- L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
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- Bennett, John & Iossa, Elisabetta, 2006.
"Building and managing facilities for public services,"
Journal of Public Economics,
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- Bennett, John & Elisabetta Iossa, 2002. "Building and Managing Facilities for Public Services," Royal Economic Society Annual Conference 2002 22, Royal Economic Society.
- John Bennett & Elisabetta Iossa, 2002. "Building and Managing Facilities for Public Services," Economics and Finance Discussion Papers 02-08, Economics and Finance Section, School of Social Sciences, Brunel University.
- Blanc-Brude, Frederic & Goldsmith, Hugh & Valila, Timo, 2007. "Ex Ante Construction Costs In The European Road Sector: A Comparison Of Public-Private Partnerships And Traditional Public Procurement," Economic and Financial Reports 2006/1, European Investment Bank, Economics Department.
- Efraim Sadka, 2006. "Public-Private Partnerships," IMF Working Papers 06/77, International Monetary Fund.
- Frédéric Blanc-Brude & Hugh Goldsmith & Timo Välilä, 2009. "A Comparison of Construction Contract Prices for Traditionally Procured Roads and Public–Private Partnerships," Review of Industrial Organization, Springer, vol. 35(1), pages 19-40, September.
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