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Theoretical peculiarities of measuring the costs and benefits in the public and private investment projects

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  • Stoyan Prodanov

Abstract

The paper treats necessity of project's benefit-cost measurement as a base for project's evaluation according to the type of project - public or private. There are number of diversities in evaluation of public and private projects. Compensated variation and equivalent variation as well as consumer surplus and producer surplus are the key concepts in determine of benefits and costs of investment opportunities. The lack of developed procedures and mechanisms for investment projects evaluation in Bulgarian public sector is an obstacle to measurement of project's influence on Bulgarian economy. The paper recommends applying of benefit-cost analysis. It uses shadow prices (economic prices) and takes into account market failures and externalities. Establishing of appropriate legal bases is a crucial moment of practical evaluation of investment projects. Public authorities should implement benefit-cost analysis for investment projects over target capital budget.

Suggested Citation

  • Stoyan Prodanov, 2002. "Theoretical peculiarities of measuring the costs and benefits in the public and private investment projects," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 93-107.
    • Handle: RePEc:bas:econth:y:2002:i:3:p:93-107
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    References listed on IDEAS

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    1. Willig, Robert D, 1976. "Consumer's Surplus without Apology," American Economic Review, American Economic Association, vol. 66(4), pages 589-597, September.
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    More about this item

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate

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