Towards a Principal-Agent Based Typology of Risks in Public-Private Partnerships

André de Palma (1, 2) , Luc Leruth (3) , Guillaume Prunier (4)

1 ENS Cachan - École normale supérieure - Cachan
2 X-DEP-ECO - Département d'Économie de l'École Polytechnique
3 IMF Office in Europe
4 X - École polytechnique

There is a strong economic rationale for close cooperation between the public and private sectors. This has resulted in a significant increase in the demand for the provision of public services through instruments combining public and private money such as public-private partnerships (PPPs or P3s). We describe these arrangements and explore how they can be analyzed using standard tools in economics (incentives and principal-agent theory). We discuss the implications of our approach in terms of identifying risks that are often overlooked before turining to the optimal risk-sharing between the public and private partners, in particular with respect to information asymmetries in risk perceptions. This allows us to propose a typology of the risks associated with PPPs, where both internal risks (the risks associated with the contract) and external risks (those associated with the project) are considered.

Mots clés: infrastructure financing; public-private partnerships; principal-agent framework; risk classification; transportation infrastructure; value for money

Domaines: Economies et finances

André de Palma, Luc Leruth, Guillaume Prunier. Towards a Principal-Agent Based Typology of Risks in Public-Private Partnerships. 2009. ⟨hal-00419234⟩