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The Basic Public Finance of Public-Private Partnerships

Eduardo Engel, Ronald Fischer and Alexander Galetovic
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Alexander Galetovic: U of the Andes

Working Papers from Yale University, Department of Economics

Abstract: Public-private partnerships (PPPs) cannot be justified because they free public funds. When PPPs are justified on efficiency grounds, the contract that optimally balances demand risk, user-fee distortions and the opportunity cost of public funds, features a minimum revenue guarantee and a revenue cap. However, observed revenue guarantees and revenue sharing arrangements differ from those suggested by the optimal contract. Also, this contract can be implemented via a competitive auction with realistic informational requirements. Finally, the allocation of risk under the optimal contract suggests that PPPs are closer to public provision than to privatization.

JEL-codes: H21 (search for similar items in EconPapers)
Date: 2008-02
New Economics Papers: this item is included in nep-cta, nep-lam, nep-pbe, nep-ppm and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Journal Article: THE BASIC PUBLIC FINANCE OF PUBLIC–PRIVATE PARTNERSHIPS (2013) Downloads
Working Paper: The Basic Public Finance of Public-Private Partnerships (2011) Downloads
Working Paper: The Basic Public Finance of Public-Private Partnerships (2007) Downloads
Working Paper: The Basic Public Finance of Public-Private Partnerships (2007) Downloads
Working Paper: The Basic Public Finance of Public-Private Partnerships (2007) Downloads
Working Paper: The Basic Public Finance of Public-Private Partnerships (2007) Downloads
Working Paper: The Basic Public Finance of Public-Private Partnerships (2007) Downloads
Working Paper: The Basic Public Finance of Public-Private Partnerships (2007) Downloads
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