The use of PPP's and the profitability rate paradox

Alain Bonnafous ()

Research in Transportation Economics, 2012, vol. 36, issue 1, 45-49

Abstract: Over the past twenty years growth in the use of PPPs for new infrastructures has signalled a significant change which completely redefines the issues of public economics in the field of transport policy. This paper concerns the optimal casting between public sphere and private operators. The analysis is based on relationships linking for each project the subsidy rate, the internal rate of return (IRR) and the additional IRR provided to the operator by subsidies. The need for subsidy appears as an increasing function of this additional IRR. Nevertheless, the gradient of the curve decreases in a marked manner. This concavity has some policy oriented consequences.

Keywords: Public investment; Subsidy; Public–private partnership (search for similar items in EconPapers)
JEL-codes: H2 H4 R4 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:retrec:v:36:y:2012:i:1:p:45-49

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DOI: 10.1016/j.retrec.2012.03.005

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