Public-Private Partnerships Versus Traditional Procurement: Innovation Incentives and Information Gathering

31 Pages Posted: 28 Feb 2010 Last revised: 15 Oct 2012

See all articles by Eva I. Hoppe

Eva I. Hoppe

University of Cologne - Department of Economics

Patrick W. Schmitz

University of Cologne; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: October 15, 2012

Abstract

A government agency wants a facility to be built and managed to provide a public service. Two different modes of provision are considered. In a public-private partnership, the tasks of building and managing are bundled, whereas under traditional procurement, these tasks are delegated to separate private contractors. The two provision modes differ in their incentives to innovate and to gather private information about future costs to adapt the service provision to changing circumstances. The government agency's preferred mode of provision depends on the information gathering costs, the costs of innovation efforts, and on the degree to which effort is contractible.

Keywords: Public-Private Partnerships, Integration Versus Separation, Information Gathering, Incomplete Contracts

JEL Classification: D86, L33, H11

Suggested Citation

Hoppe, Eva I. and Schmitz, Patrick W., Public-Private Partnerships Versus Traditional Procurement: Innovation Incentives and Information Gathering (October 15, 2012). Available at SSRN: https://ssrn.com/abstract=1560487 or http://dx.doi.org/10.2139/ssrn.1560487

Eva I. Hoppe

University of Cologne - Department of Economics ( email )

Cologne, 50923
Germany

Patrick W. Schmitz (Contact Author)

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

HOME PAGE: http://schmitz.uni-koeln.de/index.php?s=mitarbeiter&t=schmitz

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
706
Abstract Views
3,063
rank
35,510
PlumX Metrics