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Unsolicited versus solicited public partnership proposals: is there a trade-off between innovation and competition?

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  • Gonzalo Ruiz Diaz

    (Pontifical Catholic University of Peru, Department of Economics, San Miguel, Lima, Peru)

Abstract

Unsolicited proposals (UPs) are a modality of public private partnership (PPP) that is increasingly being used to attract private investors and operators to provide innovative solutions to public projects, notably in infrastructure. In most countries that expressly regulate UPs, the PPP tenders establish asymmetric conditions that favour UP proponents over other potential participants, with the aim of incentivising the presentation of innovative project solutions. The present study formally evaluates the conditions under which a competition/innovation trade-off may arise. We find that UPs can offer welfare-improving solutions compared with solicited proposals (SPs) only in exceptional circumstances. In addition, we find no robust evidence to either confirm the trade-off between innovation and competition in PPP tenders, or to indicate that UPs lead to welfare-enhancing solutions that could not be achieved under conventional SPs.

Suggested Citation

  • Gonzalo Ruiz Diaz, 2024. "Unsolicited versus solicited public partnership proposals: is there a trade-off between innovation and competition?," Public Sector Economics, Institute of Public Finance, vol. 48(3), pages 311-335.
    • Handle: RePEc:ipf:psejou:v:48:y:2024:i:3:p:311-335
    DOI: 10.3326/pse.48.3.3
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    References listed on IDEAS

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    JEL classification:

    • L97 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Utilities: General
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures

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