IDEAS home Printed from https://ideas.repec.org/a/eee/juipol/v58y2019icp158-165.html
   My bibliography  Save this article

Politics, risk, and white elephants in infrastructure PPPs

Author

Listed:
  • Daniel, Albalate
  • Germà, Bel
  • Albert, Gragera

Abstract

Theoretical research on cooperation between public and private partners in infrastructure projects suggests that they can be a tool for preventing white elephants. However, various case studies suggest that actual outcomes are largely dependent on the effective transfer of operational risk to the private partner. This paper explores policy and planning dysfunction, and the idea that private entities that participate in public-private partnerships (PPPs) with no substantial risk transfer, and under heavily subsidized schemes, may engage in lobbying and exert pressure to develop white elephant projects.

Suggested Citation

  • Daniel, Albalate & Germà, Bel & Albert, Gragera, 2019. "Politics, risk, and white elephants in infrastructure PPPs," Utilities Policy, Elsevier, vol. 58(C), pages 158-165.
    • Handle: RePEc:eee:juipol:v:58:y:2019:i:c:p:158-165
    DOI: 10.1016/j.jup.2019.05.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0957178718302546
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jup.2019.05.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Albalate, Daniel & Bel, Germà & Fageda, Xavier, 2015. "When supply travels far beyond demand: Causes of oversupply in Spain's transport infrastructure," Transport Policy, Elsevier, vol. 41(C), pages 80-89.
    2. da Cruz, Nuno F. & Marques, Rui Cunha, 2012. "Mixed companies and local governance: no man can serve two masters," LSE Research Online Documents on Economics 59778, London School of Economics and Political Science, LSE Library.
    3. Margherita Boggio, 2016. "From public to mixed ownership in local public services provision: an empirical analysis," Local Government Studies, Taylor & Francis Journals, vol. 42(3), pages 420-440, May.
    4. Eckel, Catherine C & Vining, Aidan R, 1985. "Elements of a Theory of Mixed Enterprise," Scottish Journal of Political Economy, Scottish Economic Society, vol. 32(1), pages 82-94, February.
    5. Macário, Rosário & Ribeiro, Joana & Costa, Joana Duarte, 2015. "Understanding pitfalls in the application of PPPs in transport infrastructure in Portugal," Transport Policy, Elsevier, vol. 41(C), pages 90-99.
    6. Ganuza, Juan-José & Llobet, Gerard, 2020. "The simple economics of white elephants," Mathematical Social Sciences, Elsevier, vol. 106(C), pages 91-100.
    7. Samuel Carpintero & Ole Helby Petersen, 2014. "PPP projects in transport: evidence from light rail projects in Spain," Public Money & Management, Taylor & Francis Journals, vol. 34(1), pages 43-50, January.
    8. Matsumura, Toshihiro, 1998. "Partial privatization in mixed duopoly," Journal of Public Economics, Elsevier, vol. 70(3), pages 473-483, December.
    9. Toshihiro Matsumura & Osamu Kanda, 2005. "Mixed Oligopoly at Free Entry Markets," Journal of Economics, Springer, vol. 84(1), pages 27-48, February.
    10. Nuno Ferreira da Cruz & Pedro Simões & Rui Cunha Marques, 2013. "The Hurdles of Local Governments with Ppp Contracts in the Waste Sector," Environment and Planning C, , vol. 31(2), pages 292-307, April.
    11. Jean Shaoul & Anne Stafford & Pam Stapleton, 2010. "Financial black holes," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 23(2), pages 229-255, February.
    12. Rhys Andrews & Marc Esteve & Tamyko Ysa, 2015. "Public-private joint ventures: mixing oil and water?," Public Money & Management, Taylor & Francis Journals, vol. 35(4), pages 265-272, July.
    13. Oliver Hart & Andrei Shleifer & Robert W. Vishny, 1997. "The Proper Scope of Government: Theory and an Application to Prisons," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1127-1161.
    14. Patrick W. Schmitz, 2001. "Partial Privatization and Incomplete Contracts: The Proper Scope of Government Reconsidered," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 57(4), pages 394-411, August.
    15. Boardman, Anthony E & Vining, Aidan R, 1989. "Ownership and Performance in Competitive Environments: A Comparison of the Performance of Private, Mixed, and State-Owned Enterprises," Journal of Law and Economics, University of Chicago Press, vol. 32(1), pages 1-33, April.
    16. Daniel Albalate & Germà Bel & R. Richard Geddes, 2017. "How Much Vertical Integration? Contractual Choice and Public–Private Partnerships in the United States," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 51(1), pages 25-42, August.
    17. Carpintero, Samuel & Siemiatycki, Matti, 2016. "The politics of delivering light rail transit projects through public-private partnerships in Spain: A case study approach," Transport Policy, Elsevier, vol. 49(C), pages 159-167.
    18. Bel, Germà & Bel-Piñana, Paula & Rosell, Jordi, 2017. "Myopic PPPs: Risk allocation and hidden liabilities for taxpayers and users," Utilities Policy, Elsevier, vol. 48(C), pages 147-156.
    19. Antonio Miralles Asensio, 2009. "A duration model analysis of privatization of municipal water services," Revista de Economia Aplicada, Universidad de Zaragoza, Departamento de Estructura Economica y Economia Publica, vol. 17(2), pages 47-75, Autumn.
    20. Oliveira, Matheus & Ribeiro, Joana & Macário, Rosário, 2016. "Are we planning investments to fail? Consequences of traffic forecast effects on PPP contracts: Portuguese and Brazilian cases," Research in Transportation Economics, Elsevier, vol. 59(C), pages 167-174.
    21. Pau Castells & Francesc Trillas, 2013. "The effects of surprise political events on quoted firms: the March 2004 election in Spain," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 4(1), pages 83-112, March.
    22. Chang, Zheng & Phang, Sock-Yong, 2017. "Urban rail transit PPPs: Lessons from East Asian cities," Transportation Research Part A: Policy and Practice, Elsevier, vol. 105(C), pages 106-122.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jean-Charles Hourcade & Dipak Dasgupta & Frédéric Ghersi, 2021. "Accelerating the speed and scale of climate finance in the post-pandemic context," Climate Policy, Taylor & Francis Journals, vol. 21(10), pages 1383-1397, November.
    2. Joseph,George & Ayling,Sophie Charlotte Emi & Miquel-Florensa,Pepita & Bejarano,Hernán D. & Cardona,Alejandra Quevedo, 2021. "Behavioral Insights in Infrastructure Sectors : A Survey," Policy Research Working Paper Series 9704, The World Bank.
    3. Spohr, Jonas & Wikström, Kim & Ronikonmäki, Niko-Matti & Lepech, Michael & In, Soh Young, 2024. "Are private investors overcompensated in infrastructure projects?," Transport Policy, Elsevier, vol. 152(C), pages 1-8.
    4. Ruiz Díaz, Gonzalo, 2019. "Opportunism and third-party influence on long-term public contracts," Utilities Policy, Elsevier, vol. 61(C).
    5. Välilä, Timo, 2020. "An overview of economic theory and evidence of public-private partnerships in the procurement of (transport) infrastructure," Utilities Policy, Elsevier, vol. 62(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Daniel Albalate & Germà Bel & Albert Gragera, 2018. "“When politics and lobbyism combine to promote white elephants by using PPPs”," IREA Working Papers 201823, University of Barcelona, Research Institute of Applied Economics, revised Oct 2018.
    2. Ruiz-Villaverde, Alberto & González-Gómez, Francisco & J. Picazo- Tadeo, Andrés, 2015. "The privatisation of urban water services: theory and empirical evidence in the case of Spain," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 31, pages 157-174.
    3. Ruiz-Villaverde, Alberto & Picazo-Tadeo, Andrés J. & González-Gómez, Francisco, 2015. "The ‘social choice’ of privatising urban water services: A case study of Madrid in Spain," Journal of Policy Modeling, Elsevier, vol. 37(4), pages 616-629.
    4. Fabio Monteduro, 2014. "Public–private versus public ownership and economic performance: evidence from Italian local utilities," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 18(1), pages 29-49, February.
    5. Zheng Wang & John S. Heywood & Guangliang Ye, 2020. "Optimal mixed ownership: A contract view," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 28(1), pages 45-68, January.
    6. Alessandro Marra, 2006. "Mixed Public-Private Enterprises in Europe: Economic Theory and an Empirical Analysis of Italian Water Utilities," Bruges European Economic Research Papers 4, European Economic Studies Department, College of Europe.
    7. N.F. Cruz & R.C. Marques & A. Marra & C. Pozzi, 2014. "Local Mixed Companies: The Theory And Practice In An International Perspective," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 85(1), pages 1-9, March.
    8. Peeter Peda & Giuseppe Grossi & Margo Liik, 2013. "Do ownership and size affect the performance of water utilities? Evidence from Estonian municipalities," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 17(2), pages 237-259, May.
    9. John Heywood & Guangliang Ye, 2010. "Optimal privatization in a mixed duopoly with consistent conjectures," Journal of Economics, Springer, vol. 101(3), pages 231-246, November.
    10. Ngo Van Long & Frank Stähler, 2009. "Trade policy and mixed enterprises," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(2), pages 590-614, May.
    11. Andrea Boitani & Marcella Nicolini & Carlo Scarpa, 2013. "Do competition and ownership matter? Evidence from local public transport in Europe," Applied Economics, Taylor & Francis Journals, vol. 45(11), pages 1419-1434, April.
    12. Romano, Giulia & Guerrini, Andrea, 2014. "The effects of ownership, board size and board composition on the performance of Italian water utilities," Utilities Policy, Elsevier, vol. 31(C), pages 18-28.
    13. Daniel Albalate & Germà Bel & Francisco González-Gómez & Andrés J. Picazo-Tadeo, 2017. "Weakening political connections by means of regulatory reform: Evidence from contracting out water services in Spain," Journal of Regulatory Economics, Springer, vol. 52(2), pages 211-235, October.
    14. Aidan R. VINING & Anthony E. BOARDMAN & Mark A. MOORE, 2014. "The Theory And Evidence Pertaining To Local Government Mixed Enterprises," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 85(1), pages 53-86, March.
    15. Ngo Long & Frank Staehler, 2008. "How does state ownership affect optimal export taxes?," Economics Bulletin, AccessEcon, vol. 6(37), pages 1-7.
    16. Anke S. Kessler & Christoph Lülfesmann, 2002. "Monitoring and Productive Efficiency in Public and Private Firms," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 58(2), pages 167-187, February.
    17. Junlong Chen & Chaoqun Sun & Ruiyu He & Yibing Zhang & Jiali Liu, 2023. "Optimal nationalization policy in a heterogeneous mixed oligopoly," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 807-827, March.
    18. repec:ebl:ecbull:v:6:y:2008:i:37:p:1-7 is not listed on IDEAS
    19. Huang, Naqun & Lien, Jaimie W. & Zheng, Jie, 2023. "To acquire or compete? Government intervention in transportation under different route structures," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 172(C).
    20. Friese, Maria & Heimeshoff, Ulrich & Klein, Gordon J., 2020. "Property rights and transaction costs – The role of ownership and organization in German public service provision," International Journal of Industrial Organization, Elsevier, vol. 72(C).
    21. Dapeng Cai & Yukio Karasawa-Ohtashiro, 2015. "International cross-ownership of firms and strategic privatization policy," Journal of Economics, Springer, vol. 116(1), pages 39-62, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:juipol:v:58:y:2019:i:c:p:158-165. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.sciencedirect.com/journal/utilities-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.