Public-Private Partnerships with Infrastructure Funds: an Optimal Incentive Device

Author Name ODA Keiichiro (Senior Fellow, RIETI)
Creation Date/NO. December 2018 18-E-085
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We study the scheme of public-private partnerships (PPP) from an incomplete contracting perspective. We show that PPP can implement an efficient level of investment in a public project with externalities through a bargaining game played by the public sector and the delegated private agent, which functions as a device in internalizing the externalities. Also, we analyze the governance role of an infrastructure fund in PPP through its interaction with the financial market.