Critical Infrastructure: Making It Private or Public – An Institutional Economic Discussion on the Example of Transport Infrastructure

Abstract

Governments have always been playing a central role for the provision and protection of critical infrastructures (infrastructures that are essential to national stability and security, such as energy, water or transport). Over the last decade, criticism on the increasing instability and vulnerability of these infrastructures emerged as they require special attention when it comes to modernization and protection, e.g. terrorism. Public-private partnerships open up public monopolies for competition and potential efficiency gains. In this paper, we show the risks and opportunities of including the private sector and consequently business interests on the example of transport infrastructure. We apply a novel institutional economic role model with which we can identify necessary roles (i.e. actions) for the provision and protection of critical transport infrastructure. We, then, provide a theory-driven discussion on the role of public and private actors. The results of our paper give an indication of the role of public policy for transport infrastructure. Taking a broader perspective, this paper will help to understand the effective ratio of public and private actions for the provision and protection of critical infrastructure.

Keywords: critical infrastructure, institutional role model, public-private partnership

JEL Classification: L52, L98, O17, H54, O32, O31, O38