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Public-private partnerships: Task interdependence and contractibility

  • Chen, Bin R.
  • Chiu, Y. Stephen

We examine the proper scope of public-private partnerships in the context of a project consisting of two tasks, building and operation of a facility. We investigate the optimal arrangement regarding bundling versus unbundling and private ownership versus public ownership. Like Bennett and Iossa (2006), we assume that the innovative activity in the building stage has impacts on, among other things, the subsequent operational cost. We relax the nature of task interdependence and study different contractual frameworks. The general insight is that given limitations in contractibility, contrary to common sense, complementarity between tasks favors unbundling over bundling.

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Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 28 (2010)
Issue (Month): 6 (November)
Pages: 591-603

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Handle: RePEc:eee:indorg:v:28:y:2010:i:6:p:591-603
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505551

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  21. Aghion, Philippe & Tirole, Jean, 1994. "On the Management of Innovation," IDEI Working Papers 36, Institut d'Économie Industrielle (IDEI), Toulouse.
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