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Assessment and economic regulation of transport infrastructures in the case of PPP and PFI

Author

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  • Alain Bonnafous

    (LAET - Laboratoire Aménagement Économie Transports - UL2 - Université Lumière - Lyon 2 - ENTPE - École Nationale des Travaux Publics de l'État - CNRS - Centre National de la Recherche Scientifique, IEP Lyon - Sciences Po Lyon - Institut d'études politiques de Lyon - Université de Lyon)

Abstract

Papers based on systematic literature reviews demonstrate that the scientific literature on PFIs and PPPs have been captured by industrial economics and, more specifically, by the theoretical developments on the principal-agent relationship. We propose in this communication to explore another paradigm, that of identifying the foundations of the public economy that deserve to be revisited in cases of public-private partnership. To do this, we will deal with what we consider to be the main economic controls of a transport policy, which suggests five questions. The WACC being in principle higher in a PPP case, what are the implications for the level of subsidy? Since the WACC is higher in the case of PPP/PFI, under what conditions can this option be profitable for public finances? Is the optimal tariff that which optimizes the welfare function or that which optimizes the income of the private partner? Must the optimal ranking of various projects be based on the socio-economic rate of return (ERR), on the financial internal rate of return (IRR) or on another criterion? What happens to the value for money criterion in the case of the evaluation of a program of several projects?

Suggested Citation

  • Alain Bonnafous, 2025. "Assessment and economic regulation of transport infrastructures in the case of PPP and PFI," Post-Print halshs-04259613, HAL.
    • Handle: RePEc:hal:journl:halshs-04259613
    DOI: 10.1016/j.trpro.2024.12.088
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-04259613v1
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