Efficient public-private partnerships

This paper presents a model to assess the efficiency of the capital structure in public-private partnerships (PPP). A main argument supporting the PPP approach to investment projects is the transfer of managerial skills and know-how from the private partner to the investment vehicle. The paper shows how different managerial skills and knowledge transfer schemes determine an optimal shareholding structure of the PPP. Under the assumption of lower capital cost of the public partner and lower development outlays when the investment is carried out by a private investor, an optimal capital structure is achieved with both the public and the private parties as shareholders, i.e. a mixed public-private capital structure makes it possible to internalize the financial advantage of the public sector and the managerial advantage of the private sector.Public-Private Partnerships; Joint Ventures; Public investment policy; Knowledge transfer; Hybrid governance structures;

Quality of government regulated goods

Regulators face the difficult task of determining the sets of price and quality of government-regulated goods. While the profit-maximizing monopoly always produces less in quantity than under free competition, the level of quality produced by the monopoly is not unequivocal: it depends on its cost and demand functions. The social effect of quality change is not unequivocal either, because it depends, apart from the cost function change, on the shift and tilt change of the demand curve. The problem lies in determining how the price elasticity of basic need goods responds to quality change and whether this change of quality is socially desirable. This paper analyzes quality as a decision variable in the government-regulated goods sector. Because the quality of government-regulated goods remains an externality, in particular cases the optimal level of the quality of these goods can be determined. Paradoxically, rate-of-return regulation may even make it impossible to achieve Pareto-efficient contracts for government-regulated goods.infrastructure; regulation quality; Coase Theorem;

Implementing public-private partnerships in municipalities

Public-Private Partnerships (PPPs) realize three critical strategic issues for improving the quality of urban services: the enhancement of governmental financing capabilities, the improvement of public investment efficiency, and the harnessing of consumer-orientated management expertise. Based on a sample of 20 projects embarked upon by the city of Warsaw, we examine the process of project selection, planning, and prerequisites for satisfactory completion. The paper contributes to the literature on the PPP pre-implementation process and offers a perspective on the potential of PPPs in emerging economies. Key policy recommendations: 1) central headquarters for coordination of planning process; 2) clear project selection criteria; 3) involvement of independent consulting companies to legitimate the process under subsequent administrations; 4) ex ante risk allocation and ex post performance measurement procedures; 5) pre-determined termination conditions; 6) determination to start the process and learn by doing, and 7) knowledge transfer and retention mechanisms.Public Services; Public-Private Partnerships; Urban Development; Central and Eastern Europe; Emerging Markets;

Overcoming Opportunism in Public-Private Project Finance

Opportunism, either governmental or private, is a powerful deterrent against public-private project financing, especially when considering the scale of the investment in infrastructure. The parties can, however, secure themselves against opportunism of the counter-party by exchanging an exit (put) option for the private investor and a bail-out (call) option for the public agent on the private investor’s shares. These over-the-counter options combine the stability of long-term contracts and the flexibility of short-term contracts. The exit/bail-out option mechanism reduces entry barriers by streamlining incomplete long-term contracts and avoiding contractual problems related to bounded rationality and opportunism

Coasean Quality of Regulated Goods

The quality of goods provided by public utilities depends on infrastructure features and operational inputs. I compare the economic efficiency that results from price ceilings and minimum quality standards (i.e., compliance with environmental, chemical, and performance standards and norms) imposed by a benevolent regulator to a Coasean bargaining solution between a median consumer and a monopolist. When quality is non-excludable and non-rival, rate-of-return regulation yields higher economic efficiency than price cap regulation

Analiza problemów biznesowych

This book consists of a selection of unique case studies of Polish companies in various sectors. The cases, presenting both real business dilemmas and personal perspectives, are the result of extensive in-company research and advisory projects. They reconstruct the circumstances and constraints faced by managers and encapsulate the close relationships between strategic, marketing, and financial decisions in a dynamic emerging economy. The book includes an extensive introduction to the use of the case method for students and educators. The case studies are grouped by discipline and references to supplementary literature for each case study are provided

Quality of Government Regulated Goods

Abstract Regulators face the difficult task of determing the area for right combinations of price and quality of government regulated goods. While the monopolist maximizing profits always produces less in quantity than they would produce in a free competitive environment, the level of quality produced by this monopolist is not unequivocal: it depends on the costs function and demand changes. The social effect of quality change is not unequivocal, either, because it depends, apart from the costs function, on the direction and degree of change of the demand curve tilt. The problem lies in the fact that we cannot determine how the price elasticity of basic need goods will change with the change of quality level, or whether this change of quality is socially desired. This paper analyzes quality -which is often treated as constant or exogenous -as a decision variable in the government regulated goods sector. Because the quality of government regulated goods reminds an externality, in particular cases the optimal level of the quality of these goods can be determined. Paradoxically, regulators introducing prices to guarantee a minimum return on investment may even make it impossible to achieve Pareto effective contracts for government regulated goods. JEL classification: H54, L15, L5

The Direct Employment Impact of Public Investment

We evaluate the direct employment effect of the public investment in key infrastructure— electricity, roads, schools and hospitals, and water and sanitation. Using rich firm-level panel data from 41 countries over 19 years, we estimate that US$1 million of public spending in infrastructure create 3–7 jobs in advanced economies, 10–17 jobs in emerging market economies, and 16–30 jobs in low-income developing countries. As a comparison, US$1 million public spending on R&D yields 5–11 jobs in R&D in OECD countries. Green investment and investment with a larger R&D component deliver higher employment effect. Overall, we estimate that one percent of global GDP in public investment can create more than seven million jobs worldwide through its direct employment effects alone

Partnerstwo publiczno-prywatne w sferze użyteczności publicznej

This monograph presents an analytical study of public-private partnerships. It develops formal models, provides supportive data, and advances policies for the efficient organization of the public utilities