Abstract

BARRETO NIETO, Carlos Alberto. MODEL OF PUBLIC-PRIVATE PARTNERSHIP: AN APPROACH FROM THEORY OF CONTRACTS. Rev.econ.inst. [online]. 2011, vol.13, n.25, pp.249-274. ISSN 0124-5996.

In contracts for construction of public services infraestructure, the private sector has strong incentives to reduce costs over the life of the project, which affects the quality of service. This paper extends the Hart's model to evaluate the benefits of public-private partnership, examining different types of ownership and introducing a simple mechanism for renegotiation. The exercise shows that government involvement is not justified by its ability to make innovations in quality, but because it internalizes the costs and benefits of investment in cost reduction by the private sector.

Keywords : contracts theory; public-private partnership; privatization; incentives; investment analysis.

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