Political Accountability, Incentives, and Contractual Design of Public Private Partnerships

27 Pages Posted: 3 Oct 2008 Last revised: 8 Sep 2009

See all articles by Laure Athias

Laure Athias

IDHEAP, SPAN, University of Lausanne; University of Paris 1 Sorbonne, IAE and CES

Date Written: March 11, 2009

Abstract

This paper studies political accountability under various contractual forms of Public Private Partnerships. A critical aspect of any PPP contract is the allocation of demand risk between the public authority and the private provider. We show that contracts in which the private provider bears all demand risk motivate more the public authority from responding to customer needs, since they empower consumers, which provides the public authority with more credibility in sidetrading. The policy implication is that the current greater resort to contracts in which the public authority retains all demand risk may not be optimal in terms of allocative efficiency.

Keywords: Political Accountability, Public Services Provision, Public Private Partnerships, Consumers Empowerment, Incomplete Contracts

JEL Classification: D23, H1, L5, 017

Suggested Citation

Athias, Laure, Political Accountability, Incentives, and Contractual Design of Public Private Partnerships (March 11, 2009). Available at SSRN: https://ssrn.com/abstract=1269627 or http://dx.doi.org/10.2139/ssrn.1269627

Laure Athias (Contact Author)

IDHEAP, SPAN, University of Lausanne ( email )

Route de la Maladiere 21
Chavannes-Lausanne, 1022
Switzerland
0041 21 557 40 21 (Phone)
0041 21 557 40 09 (Fax)

HOME PAGE: http://sites.google.com/site/laureathias/

University of Paris 1 Sorbonne, IAE and CES ( email )

21, Rue Broca
Paris, 75005
France

HOME PAGE: http://sites.google.com/site/laureathias/

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