IDEAS home Printed from https://ideas.repec.org/a/eee/juipol/v48y2017icp184-194.html
   My bibliography  Save this article

Public-Private Partnerships as rent-seeking opportunities: A case study on an unsolicited proposal in Lima, Peru

Author

Listed:
  • Takano, Guillermo

Abstract

Public-Private Partnerships (PPPs) are often seen as a panacea for a more efficient provision of public services and infrastructure. However, they may have adverse effects especially in weak institutional environments. This paper focuses on how the design and performance of PPP enabling mechanisms such as ‘unsolicited proposals’ (USP) permit and incentivize rent-seeking behavior in subnational contexts. It aims to elucidate the hazards of USP mechanisms by the incorporation of a perspective on incentives, which is important since it helps to map the environment where corruption and opportunism unfold. It also confronts the design of PPP policies with the specificities of certain political environments. The case-study on a large-scale road infrastructure project shows that the expected reliance on technical expertise and competitive procurement for guaranteeing public interest was outweighed by a number of design flaws. These problems were related to asymmetric, non-transparent and discretionary decision-making that led to a reallocation of unearned rents.

Suggested Citation

  • Takano, Guillermo, 2017. "Public-Private Partnerships as rent-seeking opportunities: A case study on an unsolicited proposal in Lima, Peru," Utilities Policy, Elsevier, vol. 48(C), pages 184-194.
  • Handle: RePEc:eee:juipol:v:48:y:2017:i:c:p:184-194
    DOI: 10.1016/j.jup.2017.08.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0957178717301558
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.jup.2017.08.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jean-Jacques Laffont & David Martimort, 1999. "Separation of Regulators Against Collusive Behavior," RAND Journal of Economics, The RAND Corporation, vol. 30(2), pages 232-262, Summer.
    2. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
    3. Estache, Antonio & Iimi, Atsushi, 2008. "Procurement efficiency for infrastructure development and financial needs reassessed," Policy Research Working Paper Series 4662, The World Bank.
    4. David Martimort & Flavio Menezes & Myrna Wooders & ELISABETTA IOSSA & DAVID MARTIMORT, 2015. "The Simple Microeconomics of Public-Private Partnerships," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(1), pages 4-48, February.
    5. Lambsdorff, Johann Graf, 2002. "Corruption and Rent-Seeking," Public Choice, Springer, vol. 113(1-2), pages 97-125, October.
    6. Auriol, Emmanuelle & Straub, Stéphane & Flochel, Thomas, 2016. "Public Procurement and Rent-Seeking: The Case of Paraguay," World Development, Elsevier, vol. 77(C), pages 395-407.
    7. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June.
    8. Antonio Estache & A. Iimi, 2009. "Auctions with Endogenous Participation and Quality Thresholds: Evidence from ODA Infrastructure Procurement," Working Papers ECARES 2009_006, ULB -- Universite Libre de Bruxelles.
    9. Susan Rose-Ackerman, 1996. "The Political Economy of Corruption : Causes and Consequences," World Bank Publications - Reports 11629, The World Bank Group.
    10. Eva I. Hoppe & Patrick W. Schmitz, 2013. "Public-private partnerships versus traditional procurement: Innovation incentives and information gathering," RAND Journal of Economics, RAND Corporation, vol. 44(1), pages 56-74, March.
    11. Ostrom, Vincent & Tiebout, Charles M. & Warren, Robert, 1961. "The Organization of Government in Metropolitan Areas: A Theoretical Inquiry," American Political Science Review, Cambridge University Press, vol. 55(4), pages 831-842, December.
    12. Daniel Albalate & Germ� Bel & R. Richard Geddes, 2015. "The determinants of contractual choice for private involvement in infrastructure projects," Public Money & Management, Taylor & Francis Journals, vol. 35(1), pages 87-94, January.
    13. Antonio Lecuna, 2012. "Corruption and size decentralization," Journal of Applied Economics, Universidad del CEMA, vol. 15, pages 139-168, May.
    14. Bent Flyvbjerg, 2014. "What You Should Know About Megaprojects, and Why: An Overview," Papers 1409.0003, arXiv.org.
    15. repec:elg:eechap:15325_1 is not listed on IDEAS
    16. John T. Hodges & Georgina Dellacha, 2007. "Unsolicited infrastructure proposals : how some countries introduce competition and transparency," World Bank Publications - Reports 10718, The World Bank Group.
    17. Dilip Mookherjee & Pranab K. Bardhan, 2000. "Capture and Governance at Local and National Levels," American Economic Review, American Economic Association, vol. 90(2), pages 135-139, May.
    18. Marques, Rui Cunha, 2017. "Why not regulate PPPs?," Utilities Policy, Elsevier, vol. 48(C), pages 141-146.
    19. Frédéric Boehm & Juanita Olaya, 2006. "Corruption In Public Contracting Auctions: The Role Of Transparency In Bidding Processes," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 77(4), pages 431-452, December.
    20. Pranab Bardhan & Dilip Mookherjee, 2006. "Decentralisation and Accountability in Infrastructure Delivery in Developing Countries," Economic Journal, Royal Economic Society, vol. 116(508), pages 101-127, January.
    21. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
    22. Mark Dutz & Clive Harris & Inderbir Dhingra & Chris Shugart, 2006. "Public-Private Partnership Units : What Are They, and What Do They Do?," World Bank Publications - Reports 11175, The World Bank Group.
    23. Michael Hudson, 2011. "Simon Patten on Public Infrastructure and Economic Rent Capture," American Journal of Economics and Sociology, Wiley Blackwell, vol. 70(4), pages 874-903, October.
    24. Oliver E. Williamson, 1976. "Franchise Bidding for Natural Monopolies -- in General and with Respect to CATV," Bell Journal of Economics, The RAND Corporation, vol. 7(1), pages 73-104, Spring.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Feng, Qun & Shi, Xuejun & Zhang, Jianghua, 2019. "Influence of rent-seeking on safety supervision in Chinese construction: Based on a simulation technology," Technological Forecasting and Social Change, Elsevier, vol. 138(C), pages 1-9.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Upasna Sharma & Anna Scolobig & Anthony Patt, 2012. "The effects of decentralization on the production and use of risk assessment: insights from landslide management in India and Italy," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 64(2), pages 1357-1371, November.
    2. Emmanuelle Auriol & Antonio Estache & Liam Wren-Lewis, 2018. "Can Supranational Infrastructure Regulation Compensate for National Institutional Weaknesses?," Revue économique, Presses de Sciences-Po, vol. 69(6), pages 913-936.
    3. Ivar Kolstad & Arne Wiig & Vincent Somville, 2014. "Devolutionary delusions? The effect of decentralization on corruption," CMI Working Papers 10, CMI (Chr. Michelsen Institute), Bergen, Norway.
    4. Sjahrir, Bambang Suharnoko & Kis-Katos, Krisztina & Schulze, Günther G., 2014. "Administrative Overspending in Indonesian Districts: The Role of Local Politics," World Development, Elsevier, vol. 59(C), pages 166-183.
    5. Buso, Marco & Marty, Frederic & Tran, Phuong Tra, 2017. "Public-private partnerships from budget constraints: Looking for debt hiding?," International Journal of Industrial Organization, Elsevier, vol. 51(C), pages 56-84.
    6. Schmitz, Patrick W., 2021. "Optimal ownership of public goods under asymmetric information," Journal of Public Economics, Elsevier, vol. 198(C).
    7. Harris,Colin & Cai,Meina & Murtazashvili,Ilia & Murtazashvili,Jennifer Brick, 2020. "The Origins and Consequences of Property Rights," Cambridge Books, Cambridge University Press, number 9781108969055.
    8. Chowdhury, Shyamnal & Yamauchi, Futoshi & Dewina, Reno, 2009. "Governance decentralization and local infrastructure provision in Indonesia:," IFPRI discussion papers 902, International Food Policy Research Institute (IFPRI).
    9. repec:bla:annpce:v:89:y:2018:i:1:p:25-48 is not listed on IDEAS
    10. Glenn Furton & Adam Martin, 2019. "Beyond market failure and government failure," Public Choice, Springer, vol. 178(1), pages 197-216, January.
    11. Robert B. Ekelund Jr & Edward O. Price III, 2012. "The Economics of Edwin Chadwick," Books, Edward Elgar Publishing, number 14915, June.
    12. Freddy Huet & Simon Porcher, 2013. "Innovation and regulatory outcomes: evidence from the public-private contracts for water supply in France," Chapters, in: Mehmet Ugur (ed.), Governance, Regulation and Innovation, chapter 9, pages 216-236, Edward Elgar Publishing.
    13. Eshien Chong & Carine Staropoli & Anne Yvrande-Billon, 2014. "Auction versus Negotiation in Public Procurement: Looking for Empirical Evidence," Post-Print hal-00512813, HAL.
    14. Hoppe, Eva I. & Kusterer, David J. & Schmitz, Patrick W., 2013. "Public–private partnerships versus traditional procurement: An experimental investigation," Journal of Economic Behavior & Organization, Elsevier, vol. 89(C), pages 145-166.
    15. Robert P. Inman, 2008. "Federalism's Values and the Value of Federalism," NBER Working Papers 13735, National Bureau of Economic Research, Inc.
    16. Yokessa, Maïmouna & Marette, Stéphan, 2019. "A Review of Eco-labels and their Economic Impact," International Review of Environmental and Resource Economics, now publishers, vol. 13(1-2), pages 119-163, April.
    17. Tavares Antonio F., 2018. "Municipal amalgamations and their effects: a literature review," Miscellanea Geographica. Regional Studies on Development, Sciendo, vol. 22(1), pages 5-15, March.
    18. Mark Schneider & Byung Ji, 1987. "The flypaper effect and competition in the local market for public goods," Public Choice, Springer, vol. 54(1), pages 27-39, January.
    19. Peter J. Boettke & Liya Palagashvili, 2015. "Taming Leviathan," Supreme Court Economic Review, University of Chicago Press, vol. 23(1), pages 279-303.
    20. Trillas, Francesc, 2010. "Electricity and telecoms reforms in the EU: Insights from the economics of federalism," Utilities Policy, Elsevier, vol. 18(2), pages 66-76, June.
    21. Fernando Albornoz & Antonio Cabrales, 2010. "Fiscal Centralization and the Political Process," Working Papers 2010-02, FEDEA.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:juipol:v:48:y:2017:i:c:p:184-194. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.elsevier.com/locate/inca/30478 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30478 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.