Asymmetric yardstick competition: traditional procurement versus public-private partnerships

Giuseppe Di Liddo and Annalisa Vinella

Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, 2022, vol. 8, issue 3, No 6, 669-695

Abstract: Abstract We consider local jurisdictions where rent-seeking administrators undertake identical infrastructure projects, choosing between two contractual arrangements: traditional procurement (TP) and public-private partnership (PPP). A yardstick competition mechanism is triggered through retrospective voters’ electoral decisions. A regime with TP in one jurisdiction and PPP in the other is likely to arise when projects are mildly lucrative and/or jurisdictions have moderate fiscal capacity. In this equilibrium, incumbents provide different levels of public services, face different re-election probabilities, and obtain different rents. By differentiating the project governance, incumbents specialize in rent extraction over time, thus hindering yardstick competition although jurisdictions are otherwise identical.

Keywords: Political yardstick competition; Rent seeking; Local administration; Traditional procurement; Public–private partnership (search for similar items in EconPapers)
JEL-codes: D72 H72 H77 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Working Paper: Asymmetric Yardstick Competition: Traditional Procurement versus Public-Private Partnerships (2019)
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DOI: 10.1007/s40797-021-00158-z

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