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    Traditional Procurement versus Public–Private Partnership: A Comparison of Procurement Modalities Focusing on Bundling Contract Effects

    Lee, Hojun; Kim, Kiwan | September 2018
    Abstract
    This paper studies the optimal structure of procurement contracts between public and private sectors by mainly comparing two typical procurement types: traditional procurement and public–private partnership (PPP). We first set up a principal–agent model focusing on bundling effects of procurement based on Hart (2003), and Iossa and Martimort (2015) to see under which conditions PPP has advantages over traditional procurement and vice versa. Then, we consider if the Republic of Korea’s PPP structure in practice is well designed to maximize efficiency regarding the theoretical model. By reviewing the data on major investors and equity transactions of the Republic of Korea’s PPP projects, we show that the bundling effects of PPP contracts, which is one of the main sources of efficiency, is limited under the current economic and political environment and derive policy implications for developing countries implementing PPP projects in the region.
    Citation
    Lee, Hojun; Kim, Kiwan. 2018. Traditional Procurement versus Public–Private Partnership: A Comparison of Procurement Modalities Focusing on Bundling Contract Effects. © Asian Development Bank. http://hdl.handle.net/11540/8804. License: CC BY 3.0 IGO.
    ISSN
    2313-6537 (print)
    2313-6545 (electronic)
    Keywords
    Financial & Private Sector Development
    Private Sector Investments
    Private Sector Participation
    Private Sector Projects
    Public Sector Infrastructure
    Public Sector Management
    Public Sector Projects
    Private enterprises
    Private ownership
    Government
    Public enterprises
    Public finance
    Infrastructure projects
    Development projects
    Financial loss
    Central local government relations
    Administration
    Decentralization in government
    Subnational governments
    Government monopolies
    Intergovernmental fiscal relations
    Investment of public funds
    Local finance
    Government services
    State governments
    Municipal government
    Bank failures
    Show allCollapse
    Citable URI
    http://hdl.handle.net/11540/8804
    Metadata
    Show full item record
    Thumbnail
    ewp-560-traditional-procurement-versus-ppp.pdf (281.4Kb)
    Author
    Lee, Hojun
    Kim, Kiwan
    Theme
    Private Sector
    Public Sector

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    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise