The Basic Public Finance of Public-Private Partnerships

Eduardo Engel, Ronald Fischer and Alexander Galetovic

No 13284, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Public-private partnerships (PPPs) cannot be justified because they free public funds. When PPPs are justified on efficiency grounds, the contract that optimally balances demand risk, user-fee distortions and the opportunity cost of public funds, features a minimum revenue guarantee and a revenue cap. However, observed revenue guarantees and revenue sharing arrangements differ from those suggested by the optimal contract. Also, this contract can be implemented via a competitive auction with realistic informational requirements. Finally, the allocation of risk under the optimal contract suggests that PPPs are closer to public provision than to privatization.

JEL-codes: H21 H54 L51 R42 (search for similar items in EconPapers)
Date: 2007-07
New Economics Papers: this item is included in nep-pbe, nep-ppm and nep-pub
Note: IO PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (55)

Published as Eduardo Engel & Ronald Fischer & Alexander Galetovic, 2013. "The Basic Public Finance Of PublicâPrivate Partnerships," Journal of the European Economic Association, European Economic Association, vol. 11(1), pages 83-111, 02.

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http://www.nber.org/papers/w13284.pdf (application/pdf)

Related works:
Journal Article: THE BASIC PUBLIC FINANCE OF PUBLIC–PRIVATE PARTNERSHIPS (2013)
Working Paper: The Basic Public Finance of Public-Private Partnerships (2011)
Working Paper: The Basic Public Finance of Public-Private Partnerships (2008)
Working Paper: The Basic Public Finance of Public-Private Partnerships (2007)
Working Paper: The Basic Public Finance of Public-Private Partnerships (2007)
Working Paper: The Basic Public Finance of Public-Private Partnerships (2007)
Working Paper: The Basic Public Finance of Public-Private Partnerships (2007)
Working Paper: The Basic Public Finance of Public-Private Partnerships (2007)
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