Imperfect Bundling in Public–Private Partnerships

David Martimort, Flavio Menezes, Myrna Wooders and Luciano Greco

Journal of Public Economic Theory, 2015, vol. 17, issue 1, 136-146

Abstract: We provide a first contribution to analyze how agency problems within the private consortium (i.e., imperfect bundling of private tasks) affect the performance of public–private partnerships (PPPs). When both public–private and private–private contracts are incomplete, the profit-sharing rules are key to regulate private partners' incentives. In failing to consider the role of imperfect bundling, the scope for PPPs may be overrated (or underrated) if the social benefits of infrastructure quality are large (or small) as compared to the social cost of operation efficiency. Also, it may be optimal for the government to restrict the admissible governance of private consortia.

Date: 2015
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Working Paper: Imperfect Bundling In Public-Private Partnerships (2012)
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