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Efficiency, cost and benefits in contracts of public-private partnerships [Efficiency, cost and benefits in contracts of public-private partnerships]

Author

Listed:
  • Rodrigo Nobre Fernandez

    (UFPel)

  • André Carraro

    (UFPel)

  • Ronald Otto Hillbrecht

    (UFRGS)

Abstract

This paper presents a theoretical model in order to better understand the elaboration of Public-Private Partnership contracts. Starting from the model developed by Iossa and Martimort (2012), we consider an additional parameter that measures the sensibility of the effort made in between the stages of the project. We also delimitate the numerical range of the variable that determines the technology flexibility. In this regard, a bundling regime, under which the companies form a consortium, presents better results than when they are contracted separately. This is a consequence of the first model, in which the companies are able to internalize the externalities of the productive process. On the other hand, even though the bundling regime is more efficient, the government should seek mechanisms to monitor the quality of services.

Suggested Citation

  • Rodrigo Nobre Fernandez & André Carraro & Ronald Otto Hillbrecht, 2016. "Efficiency, cost and benefits in contracts of public-private partnerships [Efficiency, cost and benefits in contracts of public-private partnerships]," Nova Economia, Economics Department, Universidade Federal de Minas Gerais (Brazil), vol. 26(2), pages 369-392, May-Augus.
    • Handle: RePEc:nov:artigo:v:26:y:2016:i:2:p:369-392
    as

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    References listed on IDEAS

    as
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    3. Elisabetta Iossa & David Martimort, 2012. "Risk allocation and the costs and benefits of public--private partnerships," RAND Journal of Economics, RAND Corporation, vol. 43(3), pages 442-474, September.
    4. Oliver Hart, 2003. "Incomplete Contracts and Public Ownership: Remarks, and an Application to Public-Private Partnerships," Economic Journal, Royal Economic Society, vol. 113(486), pages 69-76, March.
    5. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
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    11. Maskin, Eric & Tirole, Jean, 2008. "Public-private partnerships and government spending limits," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 412-420, March.
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    More about this item

    Keywords

    public-private partnerships; contracts;

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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