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Strong versus Weak Vertical Integration: Contractual Choice and PPPs in the United States

Daniel Albalate (), Germà Bel () and Richard R. Geddes ()
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Richard R. Geddes: College of Human Ecology,Cornell University

No 201518, IREA Working Papers from University of Barcelona, Research Institute of Applied Economics

Abstract: Public-Private-Partnerships are long-term, relational contracts between a public-sector sponsor and a private partner to deliver infrastructure projects across a range of economic sectors. Efficiency gains may derive from risk transfer and bundling different tasks within a single contract. We study the factors explaining the scope of bundling. We focus on the choice between weak vertical integration, which includes operational tasks alone or construction tasks alone, versus strong vertical integration, which involves the combination of operational and construction tasks. We utilize a new data set that includes 553 PPPs concluded in the U.S. between 1985 and 2013.

Keywords: Privatization, Public–Private Partnerships, Contracting, Vertical Integration JEL classification: L14; L33; L51; L88 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cta and nep-ppm
Date: 2015-09, Revised 2015-09
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