Scandinavian Working Papers in Economics
Working Papers,
Swedish National Road & Transport Research Institute (VTI)
No 2009:3: The value of public private partnerships in infrastructure
Jan-Eric Nilsson ()
Additional contact information
Jan-Eric Nilsson: VTI, Postal: Dept. of Transport Economics, P.O. Box 55685, SE-102 15 Stockholm, Sweden
Abstract: This paper makes three claims. First, in contrast to Public-Private Partnerships (PPP) in many other industries, infrastructure contracts can be conditioned on the delivery of roads and railways of appropriate user quality. This eliminates one of the concerns in the literature of the welfare properties of PPPs. Second, the bundling of investment and maintenance into one single rather than several separate contracts may provide a way to bypass rigidities and contract incompleteness in PPP contracts. Third, having a private concessionaire organising the funding of a PPP project’s investment costs may increase financing costs. This is, however, balanced by the fact that it also enhances the agent’s commitment in long-term incomplete contracts. Taken together, these conclusions point to the possibility of using PPP as an instrument for improving the construction industry’s dismal productivity performance.
Keywords: PPP projects; asymmetric and incomplete contracting; risk; commitment
28 pages, March 24, 2009
Full text files
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