Public-private Partnership as Remedy for Crumbling Infrastructure: Is this Hope Looking for Reason?

23 Pages Posted: 11 Apr 2019

See all articles by Richard E. Wagner

Richard E. Wagner

George Mason University - Department of Economics

Date Written: April 11, 2019

Abstract

It has become commonplace to describe publicly-provided infrastructure as being in a sorry state, and to advance public-private partnership as a possible remedy. This essay adopts a skeptical but not a cynical posture toward those claims. The paper starts by reviewing the comparative properties of markets and politics within a theory of budgeting where the options are construction and maintenance. This analytical point of departure explains how the incongruity between political and market action creates a politically-generated bias toward construction and away from maintenance. In short, political entities can engage in an implicit form of public debt by reducing maintenance spending, only the need to roll over debt does not manifest in higher interest rates but rather manifests in crumbling bridges and other infrastructure.

Keywords: public-private partnership; dyadic vs. triadic partnerships; construction vs. maintenance; budgetary politics; implicit public debt

JEL Classification: D78, D91, H54, L32, P16

Suggested Citation

Wagner, Richard E., Public-private Partnership as Remedy for Crumbling Infrastructure: Is this Hope Looking for Reason? (April 11, 2019). GMU Working Paper in Economics No. 19-08. Available at SSRN: https://ssrn.com/abstract=3370401 or http://dx.doi.org/10.2139/ssrn.3370401

Richard E. Wagner (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
334 Enterprise Hall
Fairfax, VA 22030
United States
(703) 993-1132 (Phone)

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