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Title:The basic public finance of public-private partnerships PDF Logo
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.
cost of public funds
demsetz auction
minimum revenue guarantees
revenue and profit caps
scope of government,
Document Type:Working Paper
Appears in Collections:Center Discussion Papers, Economic Growth Center (EGC), Yale University

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