Towards a Principal-Agent Based Typology of Risks in Public-Private Partnerships

André de Palma (), Luc Leruth and Guillaume Prunier
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Luc Leruth: IMF Office in Europe - EUO
Guillaume Prunier: X - École polytechnique - IP Paris - Institut Polytechnique de Paris

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Abstract: There is a strong economic rationale for close cooperation between the public and private sectors. This has resulted in a significant increase in the demand for the provision of public services through instruments combining public and private money such as public-private partnerships (PPPs or P3s). We describe these arrangements and explore how they can be analyzed using standard tools in economics (incentives and principal-agent theory). We discuss the implications of our approach in terms of identifying risks that are often overlooked before turining to the optimal risk-sharing between the public and private partners, in particular with respect to information asymmetries in risk perceptions. This allows us to propose a typology of the risks associated with PPPs, where both internal risks (the risks associated with the contract) and external risks (those associated with the project) are considered.

Keywords: infrastructure financing; public-private partnerships; principal-agent framework; risk classification; transportation infrastructure; value for money (search for similar items in EconPapers)
Date: 2009-09-23
Note: View the original document on HAL open archive server: https://hal.science/hal-00419234
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Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Towards a Principal-Agent Based Typology of Risks in Public-Private Partnerships (2012)
Working Paper: Towards a Principal-Agent Based Typology of Risks in Public-Private Partnerships (2009)
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