Financing Costs and the Efficiency of Public-Private Partnerships

Besart Avdiu and Alfons Weichenrieder

No 8711, CESifo Working Paper Series from CESifo

Abstract: The paper compares provision of public infrastructure via public-private partnerships (PPPs) with provision under government management. Due to soft budget constraints of government management, PPPs exert more effort and therefore have a cost advantage in building infrastructure. At the same time, hard budget constraints for PPPs introduce a bankruptcy risk and bankruptcy costs. Consequently, if bankruptcy costs are high, PPPs may be less efficient than public management, although this does not result from PPPs’ higher interest costs.

Keywords: public-private partnerships; infrastructure; financing costs; default (search for similar items in EconPapers)
JEL-codes: G33 H11 H54 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-cfn and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_8711

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