Influence of market structures on concession pricing in Public-Private-Partnership utilities with asymmetric information. (April 2021)

• Record Type: Journal Article
• Authors: Yuan, Jingfeng; Ding, Hongxing; Huang, Zeyuan; Deng, Binchao; Li, Shuai; Huang, Wei
• Is Part Of: Utilities policy. Volume 69(2021)
• Publication Date: 2021-04
• Subjects: Concession pricing -- Public-Private-Partnership (PPP) -- Market structure; Public utilities -- United States -- Periodicals; Public utilities -- Government policy -- United States -- Periodicals; 363.6
• DOI: 10.1016/j.jup.2020.101162
• Languages: English
• ISSNs: 0957-1787

Abstract

Abstract: This study investigates the influence of market structures on Public-Private-Partnership (PPP) utility concession pricing. The private firm's cost and the government's public-management cost, and redundancy risk in the separation scenario, are considered by modeling concession pricing. The results suggest that the effect of the firm's cost is similar under the integrated and separated structures. Redundancy risk increases service prices and may decrease government subsidies. The findings suggest that vertical separation may help control public-management costs under PPPs. Highlights: Two concession pricing models are constructed to examine the influence of market structures in PPP utilities. The firm's cost and the government's public-management cost, and the redundancy risk are considered. The effects of public-management costs on government subsidies are different under different market structures. Redundancy risk increases service prices and may decrease the government subsidy. Vertical separation is a better choice when firm's costs are high and may help control public-management costs under PPPs.