Efficient Public-Private Partnerships
43 Pages Posted: 20 Sep 2010 Last revised: 22 Oct 2010
Date Written: October 20, 2010
This paper presents a model to assess the efficiency of the capital structure in public-private partnerships (PPP). A main argument supporting the PPP approach for investment projects is the transfer of managerial skills and know-how from the private partner to the investment vehicle. The paper shows how different managerial skills and knowledge transfer schemes determine an optimal shareholding structure of the PPP. Under the assumption of lower capital cost of the public partner and lower development outlays when the investment is carried out by a private investor, an optimal capital structure is achieved with both the public and the private parties as shareholders, i.e. a mixed public-private capital structure allows to internalize the financial advantage of the public sector and the managerial advantage of the private sector.
Keywords: Public-Private Partnerships, Joint Ventures, Public Investment Policy, Knowledge Transfer, Hybrid Governance Structures
JEL Classification: D23, G32, H43, H54, L19
Suggested Citation: Suggested Citation