Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/26996
Authors: 
Engel, Eduardo M. R. A.
Fischer, Ronald D.
Galetovic, Alexander
Year of Publication: 
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

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