Public-private partnerships: contract design and risk transfer

Mathias Dewatripont and Patrick Legros

No 5/2005, EIB Papers from European Investment Bank, Economics Department

Abstract: This paper critically assesses the implications of contract design and risk transfer on the provision of public services under public-private partnerships (PPPs). Two results stand out. First, the alleged strength of PPPs in delivering infrastructure projects on budget more often than traditional public procurement could be illusory. This is - to put it simply - because there are costs of avoiding cost overruns and, indeed, cost overruns can be viewed as equilibrium phenomena. Second, the use of external (i.e., third-party) finance in PPPs, while bringing discipline to project appraisal and implementation, implies that part of the return on efforts exerted by the private-sector partner accrues to outside investors; this may undo whatever beneficial effects arise from "bundling" the construction and operation of infrastructure projects, which is a hallmark of PPPs.

Keywords: public-private partnerships; contract desigh; procurement; risk transfer (search for similar items in EconPapers)
JEL-codes: D61 D86 H40 L51 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2005-06-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (61)

Downloads: (external link)
http://www.eib.org/attachments/efs/eibpapers/eibpa ... 0_n01_en.pdf#page=96 Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:eibpap:2005_005

Access Statistics for this paper

More papers in EIB Papers from European Investment Bank, Economics Department Contact information at EDIRC.
Bibliographic data for series maintained by Polyxeni Kanelliadou ().