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Reducing the debt : is it optimal to outsource an investment?

Author

Listed:
  • Gilles Edouard Espinosa

    (CERMICS)

  • Caroline Hillairet

    (CMAP)

  • Benjamin Jourdain

    (CERMICS, MATHRISK)

  • Monique Pontier

    (IMT)

Abstract

We deal with the problem of outsourcing the debt for a big investment, according two situations: either the firm outsources both the investment (and the associated debt) and the exploitation to a private consortium, or the firm supports the debt and the investment but outsources the exploitation. We prove the existence of Stackelberg and Nash equilibria between the firm and the private consortium, in both situations. We compare the benefits of these contracts. We conclude with a study of what happens in case of incomplete information, in the sense that the risk aversion coefficient of each partner may be unknown by the other partner.

Suggested Citation

  • Gilles Edouard Espinosa & Caroline Hillairet & Benjamin Jourdain & Monique Pontier, 2013. "Reducing the debt : is it optimal to outsource an investment?," Papers 1305.4879, arXiv.org, revised Jun 2015.
    • Handle: RePEc:arx:papers:1305.4879
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    References listed on IDEAS

    as
    1. Emmanuelle Auriol & Pierre M. Picard, 2009. "Government Outsourcing: Public Contracting with Private Monopoly," Economic Journal, Royal Economic Society, vol. 119(540), pages 1464-1493, October.
    2. Elisabetta Iossa & David Martimort & Jérôme Pouyet, 2008. "Partenariats public-privé. Quelques réflexions," Revue économique, Presses de Sciences-Po, vol. 59(3), pages 437-449.
    3. Elisabetta Iossa & Patrick Rey, 2014. "Building Reputation For Contract Renewal: Implications For Performance Dynamics And Contract Duration," Journal of the European Economic Association, European Economic Association, vol. 12(3), pages 549-574, June.
    4. Auriol, Emmanuelle & Picard, Pierre M., 2013. "A theory of BOT concession contracts," Journal of Economic Behavior & Organization, Elsevier, vol. 89(C), pages 187-209.
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