The Risks and Tricks in Public-Private Partnerships
Giancarlo Spagnolo and
No 64, IEFE Working Papers from IEFE, Center for Research on Energy and Environmental Economics and Policy, Universita' Bocconi, Milano, Italy
PPPs have been implemented broadly around the world in the infrastructure sector -water and sanitation, transports, energy, and telecommunications- and, more recently, in the provision of public services -education, health, prisons, and water and waste management. Key aspects of the contract design, such as risk allocation and payment mechanisms, significantly affect the PPP outcomes because they affect the incentives of the public and private parties to deliver a public service that satisfies user needs. Nevertheless, contractual provisions used in practice often do not implement the efficient risk allocation. In this paper, we discuss the crucial role of the public sector in designing and imposing standardized contracts, monitoring their compliance, disclosing contractual information to the general public, and transferring risks to the private sector in order to reduce the likelihood of PPP performance failure.
Keywords: Concession contracts; Incentives; Public Private Partnerships; Risk Allocation (search for similar items in EconPapers)
JEL-codes: D02 D20 D82 L33 L38 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cta, nep-hrm, nep-ppm and nep-reg
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