How (Not) to Foster Innovations in Public Infrastructure Projects

Patrick Schmitz and ,
Authors registered in the RePEc Author Service: Eva Isabel Hoppe

No 13406, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The government wants an infrastructure-based public service to be provided. First the infrastructure has to be built, subsequently it has to be operated. Should the government bundle the building and operating tasks in a public-private partnership? Or should it choose traditional procurement, i.e. delegate the tasks to different firms? Each task entails unobservable investments to come up with innovations. It turns out that depending on the nature of the innovations, bundling may either stimulate or discourage investments. Moreover, we find that if renegotiation cannot be prevented, a public-private partnership may lead the government to deliberately opt for a technologically inferior project.

Keywords: Procurement; Innovations; Public-private partnerships; Moral hazard; Renegotiation (search for similar items in EconPapers)
JEL-codes: D86 H11 H54 H57 L33 (search for similar items in EconPapers)
Date: 2018-12
New Economics Papers: this item is included in nep-mic, nep-ppm, nep-tre and nep-ure
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Related works:
Journal Article: How (Not) to Foster Innovations in Public Infrastructure Projects (2021)
Working Paper: How (Not) to Foster Innovations in Public Infrastructure Projects (2019)
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