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

Gilles Edouard Espinosa, Caroline Hillairet, Benjamin Jourdain () and Monique Pontier ()
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Gilles Edouard Espinosa: CERMICS - Centre d'Enseignement et de Recherche en Mathématiques et Calcul Scientifique - ENPC - École nationale des ponts et chaussées
Caroline Hillairet: CMAP - Centre de Mathématiques Appliquées de l'Ecole polytechnique - Inria - Institut National de Recherche en Informatique et en Automatique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique
Benjamin Jourdain: CERMICS - Centre d'Enseignement et de Recherche en Mathématiques et Calcul Scientifique - ENPC - École nationale des ponts et chaussées, MATHRISK - Mathematical Risk Handling - UPEM - Université Paris-Est Marne-la-Vallée - ENPC - École nationale des ponts et chaussées - Centre Inria de Paris - Inria - Institut National de Recherche en Informatique et en Automatique
Monique Pontier: IMT - Institut de Mathématiques de Toulouse UMR5219 - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - INSA Toulouse - Institut National des Sciences Appliquées - Toulouse - INSA - Institut National des Sciences Appliquées - UT - Université de Toulouse - UT2J - Université Toulouse - Jean Jaurès - UT - Université de Toulouse - UT3 - Université Toulouse III - Paul Sabatier - UT - Université de Toulouse - CNRS - Centre National de la Recherche Scientifique

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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.

Keywords: Optimization; Nash equilibrium; Stackelberg equilibrium; Partial information; Stochastic control; Outsourcing; Public Debt; Public-Private-Partnership (search for similar items in EconPapers)
Date: 2016-03-19
Note: View the original document on HAL open archive server: https://enpc.hal.science/hal-00824390v2
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Published in Mathematics and Financial Economics, 2016, 10 (4), pp.457-493. ⟨10.1007/s11579-016-0166-8⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00824390

DOI: 10.1007/s11579-016-0166-8

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