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When politics and lobbyism combine to promote white elephants by using PPPs

Daniel Albalate (), Germà Bel () and Albert Gragera
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Daniel Albalate: Universitat de Barcelona, Departament d’Estadística, Econometria i Economia Aplicada, Avda. Diagonal 690, 08034 (Barcelona), Telf: +34.93.4031131
Albert Gragera: Technical University of Denmark, Produktionstorvet Building 426, 2800 Kgs. Lyngby, Denmark.

No 201823, IREA Working Papers from University of Barcelona, Research Institute of Applied Economics

Abstract: Theoretical insights into the cooperation between public and private partners (PPPs) suggest that they can be an effective tool for preventing ‘white elephant’ type projects. However, various case studies have shown that this belief is largely dependent on the effective transfer of operational risk to the private partner, and on the application of user-pay funding. This paper goes one step further and explores the idea that private partners that participate in PPPs with no substantial risk transfer – and under heavily subsidized schemes – can act as lobbies, exerting pressure to develop white elephants.

Keywords: PPP; political favoritism; infrastructure; JEL classification: L14, L33, L51. (search for similar items in EconPapers)
Date: 2018-10, Revised 2018-10
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Handle: RePEc:ira:wpaper:201823