Public–Private Partnerships, Commitment and X-Inefficiency. Issue 2 (December 2018)

• Record Type: Journal Article
• Authors: Chowdhury, Indrani Roy; Chowdhury, Prabal Roy
• Is Part Of: Arthaniti. Volume 17:Issue 2(2018)
• Page Start: 157
• Page End: 167
• Publication Date: 2018-12
• Subjects: Public–private partnerships -- risk-sharing -- X-inefficiency -- commitment -- organisational structure; Economics -- Periodicals; 330
• DOI: 10.1177/0976747918795226
• Languages: English
• ISSNs: 0976-7479

Abstract

We examine the formation of public–private partnerships (PPPs), one of the most important organisational forms to evolve over the last few decades. Given the volume of infrastructural investment required, PPPs seem essential for India's development. We unearth a role for PPP formation that is new in the literature, namely its role as a commitment device. In particular, we argue that the presence of the private firm allows a PPP to credibly commit to discontinuing the project when efficiency considerations demand so. JEL: D02, D04, D72, D73, D43