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http://hdl.handle.net/10419/26996
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| Title: | | The basic public finance of public-private partnerships  |
| Authors: | | Engel, Eduardo M. R. A. Fischer, Ronald D. Galetovic, Alexander |
| Issue Date: | | 2007 |
| Series/Report no.: | | Center discussion paper // Economic Growth Center 957 |
| Abstract: | | Public-private partnerships (PPPs) cannot be justified because they free public funds. When PPPs are justified on efficiency grounds, the contract that optimally balances demand risk, user-fee distortions and the opportunity cost of public funds, features a minimum revenue guarantee and a revenue cap. However, observed revenue guarantees and revenue sharing arrangements differ from those suggested by the optimal contract. Also, this contract can be implemented via a competitive auction with realistic informational requirements. Finally, the allocation of risk under the optimal contract suggests that PPPs are closer to public provision than to privatization. |
| Subjects: | | Bundling cost of public funds demsetz auction minimum revenue guarantees privatization revenue and profit caps scope of government, subsidies. |
| JEL: | | H21 H54 L51 R42 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Center Discussion Papers, Economic Growth Center (EGC), Yale University
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