Auctions, Ex Post Competition and Prices: The Efficiency of Public-Private Partnerships

Abstract

Using an original database concerning 1637 French local public authorities in 2001, we explore the relationships between prices charged by private operators in water contracts and ex post competition. We show that prices charged in contracts, in which operators are in a monopoly situation throughout the duration of the contract, are not affected by a competition effect. However, this competition effect appears to be crucial in explaining prices when combined with a termination effect reflecting the fact that the contract is close to being renewed, and hence re-auctioned. Our study also shed light on the impact of organizational choices (public or private) on prices but does not conclude to the superiority of one organizational choice over the other.

Keywords: public services, Contractual choices, Franchise bidding, Public-Private Partnerships, Competition and prices, Concession Contracts

JEL Classification: H0, H7, K00, L33