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
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Citable URI
http://hdl.handle.net/11540/8804Metadata
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