Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/203400 
Year of Publication: 
2018
Series/Report no.: 
ADB Economics Working Paper Series No. 560
Publisher: 
Asian Development Bank (ADB), Manila
Abstract: 
This paper studies the optimal structure of procurement contracts between public and private sectors by mainly comparing two typical procurement types: traditional procurement and public-private partnership (PPP). We first set up a principal-agent model focusing on bundling effects of procurement based on Hart (2003), and Iossa and Martimort (2015) to see under which conditions PPP has advantages over traditional procurement and vice versa. Then, we consider if the Republic of Korea's PPP structure in practice is well designed to maximize efficiency regarding the theoretical model. By reviewing the data on major investors and equity transactions of the Republic of Korea's PPP projects, we show that the bundling effects of PPP contracts, which is one of the main sources of efficiency, is limited under the current economic and political environment and derive policy implications for developing countries implementing PPP projects in the region.
Subjects: 
bundling contract
infrastructure
public-private partnership
traditional procurement
JEL: 
H54
H81
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

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