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Imperfect Bundling In Public-Private Partnerships

Luciano Greco

No 147, "Marco Fanno" Working Papers from Dipartimento di Scienze Economiche "Marco Fanno"

Abstract: The economic literature on PPPs has generally overlooked agency problems within private consortia. We provide a first contribution in this direction, relying on a simple incomplete contracts framework where a Builder and an Operator set up a Special Purpose Vehicle (SPV) to carry out a contract with the government. Because of incomplete contracts, the bundling of tasks is imperfect, and the SPV ownership structure is the main tool to regulate the power of private incentives. The scope for welfare-improving PPPs reduces with respect to the case of perfect bundling, and the private negotiation always awards a suboptimal SPV-ownership share to the Builder. Thus, imposing ownership requirements in PPPs is a welfare-improving policy.

Keywords: Incomplete contracts; Nash Bargaining; Ownership; Special-Purpose Vehicle. (search for similar items in EconPapers)
JEL-codes: D86 H11 H57 L33 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2012-07
New Economics Papers: this item is included in nep-cta
References: Add references at CitEc
Citations: View citations in EconPapers (13)

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Journal Article: Imperfect Bundling in Public–Private Partnerships (2015) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:pad:wpaper:0147

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