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“Recovery Risk and Labor Costs in Public-Private-Partnerships: Contractual Choice in the U.S. Water industry”

Author

Listed:
  • Daniel Albalate

    (Faculty of Economics, University of Barcelona)

  • Germà Bel

    (Faculty of Economics, University of Barcelona)

  • R. Richard Geddes

    (Department of Policy Analysis & Management, College of Human Ecology, Cornell University)

Abstract

We use an ordered logistic model to empirically examine the factors that explain varying degrees of private involvement in the U.S. water sector through public-private partnerships. Our estimates suggest that a variety of factors help explain greater private participation in this sector. We find that the risk to private participants regarding cost recovery is an important driver of private participation. The relative cost of labor is also a key factor in determining the degree of private involvement in the contract choice. When public wages are high relative to private wages, private participation is viewed as a source of cost savings. We thus find two main drivers of greater private involvement: one encouraging private participation by reducing risk, and another encouraging government to seek out private participation in lowering costs.

Suggested Citation

  • Daniel Albalate & Germà Bel & R. Richard Geddes, 2012. "“Recovery Risk and Labor Costs in Public-Private-Partnerships: Contractual Choice in the U.S. Water industry”," IREA Working Papers 201222, University of Barcelona, Research Institute of Applied Economics, revised Dec 2012.
    • Handle: RePEc:ira:wpaper:201222
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    References listed on IDEAS

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    More about this item

    Keywords

    Privatization; Public-Private Partnerships; Water; Contracting out. JEL classification: H4; H54; H7; L88; L9;
    All these keywords.

    JEL classification:

    • H4 - Public Economics - - Publicly Provided Goods
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • L88 - Industrial Organization - - Industry Studies: Services - - - Government Policy
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities

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