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Risk allocation and the costs and benefits of public--private partnerships

Abstract : We study the agency costs of delegated public service provision, focusing on the link between organizational forms and uncertainty at project implementation. We consider a dynamic multitask moral hazard environment where the mapping between effort and performance is ex ante uncertain but new information may arise during operations. Our analysis highlights the costs and benefits that bundling planning and implementation--as under public--private partnerships--can bring in terms of project design and operational costs under various scenarios, possibly allowing for asymmetric information, moral hazard and renegotiation. It also shows that relying on private finance enhances the benefits of bundling only if lenders have enough expertise to assess project risks.
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Contributor : Caroline Bauer Connect in order to contact the contributor
Submitted on : Monday, April 15, 2013 - 10:53:12 AM
Last modification on : Saturday, April 30, 2022 - 3:03:36 AM

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Elisabetta Iossa, David Martimort. Risk allocation and the costs and benefits of public--private partnerships. RAND Journal of Economics, 2012, 43 (3), pp.442-474. ⟨10.1111/j.1756-2171.2012.00181.x⟩. ⟨hal-00813153⟩



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