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Optimal Provision of Infrastructure using Public-Private Partnership Contracts

Author

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  • Gerard van der Laan

    (Vrije Universiteit Amsterdam)

  • Pieter Ruys
  • Dolf Talman

    (Tilburg University)

Abstract

This paper deals with the optimal provision of infrastructure by means of public-private partnership contracts. Inthe economic literature infrastructure is characterized as a large, indivisible and non-rival capital good thatproduces services for its users. The non-rivalness or nonexcludability of the infrastructure and the large costs ofinfrastructure causes it to be a public good. On the other hand, infrastructure possesses characteristics of a privatecommodity because it facilitates of the use of a complementary private commodity. Modern monitoring techniquesopen new possibilities to reveal the need of individual users for infrastructure. Consequently, a large part of thepublic financing of infrastructure can be privatised. In this paper we discuss the design of an operational system tofinance the costs of infrastructure. It will be shown that the system basically can result in an economically efficientlevel of infrastructure. The basic idea is that use of infrastructure is constrained by the availability of theinfrastructure being provided. Therefore users who are hampered by too small a provision of the infrastructure arewilling to pay for the use of infrastructure.

Suggested Citation

  • Gerard van der Laan & Pieter Ruys & Dolf Talman, 2001. "Optimal Provision of Infrastructure using Public-Private Partnership Contracts," Tinbergen Institute Discussion Papers 01-011/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20010011
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    References listed on IDEAS

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    1. Ruys, P.H.M. & van der Laan, G., 1987. "Computation of an industrial equilibrium," Research Memorandum FEW 257, Tilburg University, School of Economics and Management.
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    Cited by:

    1. Heba Samir & Aya Maher, 2018. "Public Private Partnership: Insights from the Egyptian Experience," International Journal of Human Resource Studies, Macrothink Institute, vol. 8(3), pages 241253-2412, December.

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