دانلود مقاله ISI انگلیسی شماره 3533
عنوان فارسی مقاله

مشارکت های عمومی - خصوصی : وابستگی متقابل وظیفه و قابلیت انقباض

کد مقاله سال انتشار مقاله انگلیسی ترجمه فارسی تعداد کلمات
3533 2010 13 صفحه PDF سفارش دهید 12974 کلمه
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عنوان انگلیسی
Public–private partnerships: Task interdependence and contractibility

Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)

Journal : International Journal of Industrial Organization, Volume 28, Issue 6, November 2010, Pages 591–603

کلمات کلیدی
مکمل - جایگزینی - قراردادهای ناقص - مشارکت بخش دولتی ـ خصوصی -
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پیش نمایش مقاله مشارکت های عمومی - خصوصی : وابستگی متقابل وظیفه و قابلیت انقباض

چکیده انگلیسی

We examine the proper scope of public–private partnerships in the context of a project consisting of two tasks, building and operation of a facility. We investigate the optimal arrangement regarding bundling versus unbundling and private ownership versus public ownership. Like Bennett and Iossa (2006), we assume that the innovative activity in the building stage has impacts on, among other things, the subsequent operational cost. We relax the nature of task interdependence and study different contractual frameworks. The general insight is that given limitations in contractibility, contrary to common sense, complementarity between tasks favors unbundling over bundlin

مقدمه انگلیسی

Nowadays, it is common across countries that governmental agencies collaborate with the private sector to deliver public services; in some cases, even the whole project is contracted out to a single firm that takes responsibilities for all involved tasks, such as both building and maintaining the facility. In the literature of public–private partnerships (PPPs), as this practice is usually referred to, two issues have received much attention: multitasking and investment contractibility. Given multiple tasks – such as building and subsequent maintenance of a facility – an important question is whether the tasks should be handled by a single consortium (in case of bundling) or by two separate firms (in case of unbundling). This question of course depends on the contractibility of and the relationship between tasks, as is shown in the literature. In this paper, we further examine this question, extending the existing work. Our paper is closely related to the piece by Bennett and Iossa (2006), in which two non-contractible innovation activities (or investments in short), one in the building stage and the other in the operating stage, are supposed to reduce cost and enhance quality. Assuming a sort of task externality so that the investment in the building stage may increase or decrease the cost in the operating stage, the paper shows that, with positive externality, it is more efficient for the tasks to be bundled; with negative externality, it is more efficient for the tasks to be separated. In another paper where both operational costs and service quality are contractible, Martimort and Pouyet (2008) also show similar results. However, the relationship between tasks can be richer. They may be interdependent, being substitutes, such that making more of one investment will decrease the returns of making more of another investment. For example, a hospital may be built in a more specified manner so that, while the subsequent operational cost is generally lower (i.e., positive externality), further enhancement of quality or alternation of usage would be more difficult to achieve. The two tasks may be interdependent, sharing complementaries, such that making more of one investment will increase the returns of making more of another investment. For instance, a school may be built with better-quality and more-expensive-glass windows so that, whereas the subsequent operational cost is generally lower (i.e., positive externality), an increase in guard services during the operating stage may be more valuable as it prevents a greater loss from pupils' vandalism. In this paper, we examine the implications of task interdependence that allows for substitutability and complementarity; another novelty is the way we model investment contractibility, which will be clear in a moment. To briefly illustrate how task interdependence matters, let us revisit the contractual framework in Bennett and Iossa (2006). Consider the case of task complementarity. In case of unbundling, the builder could bargain with the manager or the government. After the bargaining, the builder could share the benefits generated by the manager's investment, while not bearing any cost incurred by such investment. Because of complementarity, a higher building investment leads to a higher operating investment, yielding a greater net surplus to be split. Anticipating more rents to be extracted from the manager's investment, the builder has a greater incentive to invest. As a result, investment complementarity helps mitigate the underinvestment problem of the builder under unbundling. In the case of bundling, on the contrary, when investing in the building stage, the consortium will internalize not only the benefits but also the costs of subsequent investment, resulting in a dampened investment incentive on his part.1 Thus, at the margin, task complementarity favors unbundling, relative to bundling. Notice that because task complementarity can be viewed as a special kind of positive externality, this result sheds new, somewhat counter-intuitive, light to the issue on PPPs. In the main body of this paper, we focus on a contractual framework somewhat different from Bennett and Iossa (2006); we assume that the operation task becomes contractible subsequent to the building stage. Examples from construction sectors show that the contract on service provision is usually finalized until the infrastructure is in place. Moreover, even though a contract specifies the operating task in advance of the project, it may still be subject to adaptation and renegotiation after the construction is carried out. These observations are consistent with the idea that the requirements regarding the successive operation task become revealing as time goes by.2 We think that the framework of “interim contractibility” is worthwhile studying (see Iossa and Martimort (2008) for discussions). To check the robustness of our results, we also examine the role of task interdependence in the incomplete contracting framework as in Bennett and Iossa (2006) and in complete contracting frameworks as in Martimort and Pouyet (2008) and Schmitz (2005). In the framework of interim contractibility, our findings suggest that under private ownership, task externality, as well as task interdependence, still plays an important role in shaping the trade-offs between integration and separation. In particular, task complementarity favors the builder's ownership, but disfavors the consortium's ownership. The intuition is much similar to what we have discussed with respect to Bennett and Iossa's model, but the difference is that, given the interim contractibility, the negotiation on the ex post adoption of the operating investment is replaced by the negotiation on the ex ante approval prior to its choice. Through such bargaining, either the builder or the consortium shares the benefits (generated by the operating investment), and the gains are in turn dependent on his own investment in the building stage. On the other hand, we find that under public ownership, the difference between integration and separation vanishes. The reasons trace to the interim contractibility of the operating investment as well as the veto power of the government on the ex post adoption of the building investment. Besides the bundling versus unbundling problem, this paper also reexamines, in different contractual frameworks, whether the project should be privately owned or publicly owned. In general, our main results are consistent with those in Bennett and Iossa (2006), where a larger residual value effect and a smaller social value effect favor private ownership, and public ownership is favored when the opposite is true. The present paper belongs to the strand of literature that investigates either desirable contracting schemes in the public–private partnership (e.g., Hart, 2003, Martimort & Pouyet, 2008, Bentz et al., 2001, Iossa & Martimort, 2008 and Hoppe & Schmitz, 2008) or optimal ownership structures in the public–private partnership (e.g., Hart et al., 1997, Francesconi & Muthoo, 2006, Besley & Ghatak, 2001 and Bennett & Iossa, 2006). But none of these papers has addressed exactly the same questions as we do here. Our research is also related to the papers that study the holdup problem of sequential specific investments. Like what we assume here, Smirnov and Wait (2004) assume that, if an initial investment is made, contracting on the subsequent investment becomes possible. But they address a different question about whether the parties should make investments simultaneously or sequentially. Another relevant paper is De Fraja (1999), who find that if specific investments are made sequentially, ex ante contracting can solve the holdup problem even though there exist two-sided direct externalities across investments.3 Here, we study the interrelationship among three parties (namely, two investors and one principal), instead of between two, leading to different results. The remainder of this paper is organized as follows. Section 2 presents the main model. Section 3 examines the optimal regime when the operation task becomes contractible subsequent to the building stage. Section 4 briefly discusses the issue in the framework used by Bennett and Iossa (2006), in which all tasks are non-contractible. Section 5 addresses the issue from a complete contract perspective. Section 6 concludes.

نتیجه گیری انگلیسی

This paper has reexamined the proper scope of public–private partnerships in the context of a project consisting of two tasks, such as construction and operation of a facility. The focus of analysis has been the role of task or investment interdependence, i.e., the two investments are either complements or substitutes. Whether the operation investment is non-contractible or interim contractible, we have found that investment interdependence is a determinant of the optimal PPPs. In particular, favored by the cost-reduction effect of the building investment, integration is nonetheless disfavored by investment complementarity. While the focus of this paper is on the interim contractibility framework, in which the second, operation task is contractible subsequent to the building stage, we have also argued that weaker but similar insights hold true in the incomplete contracting framework in the fashion of Bennett and Iossa (2006). These findings regarding the role of task interdependence, while counter-intuitive, contribute to the understanding of one empirical puzzle raised in the literature. In a framework of investment externality but not investment interdependence, unbundled projects are rationalized by negative externality. Despite a theoretical possibility, examples of negative externality are relatively rare (see Iossa and Martimort, 2008). However, in our framework where investment interdependence is also allowed, unbundled projects can now be rationalized by weak positive externality together with strong complementarity. Our theory thus provides an alternative explanation to the phenomena. For example, the undesirable performance of PFI schools can be due to the fact that a better fitness might give rise to a higher value of guide service. In other cases involving high technology, such as IT projects, because more advanced and innovative system usually comes up with higher degree of complexity, more effort is required for the operator in learning how to handle it efficiently. The complementarity between building and operating thus weakens the advantage of bundling these tasks. On the other hand, in such sectors as prison, waste disposal, transport and hospital, sequential investments of building and operating might exhibit certain level of substitutability. According to a report by National Audit Office (2003) in the United Kingdom, compared to traditional procurement, PFI prisons tend to improve performance and save costs. The reason is that innovative design solutions help reduce the level of staffing needed to ensure security in prison. The underlying reason may be the substitutability between building and operating, as much as the positive externality. In the waste disposal sector, a very well designed garbage-categorizing system may conceivably lessen the burden of garbage collectors and cleaners. According to our theory, bundling the tasks of designing and operating is favored in this case. In the transport sector, if an electronic eye system located in proper places along each highway is of very good quality, detection of speedsters may not demand much effort from the police or other rosters. Similarly, these tasks are better contracted out in a bundle. Because construction and management of many public projects often demonstrate interdependence, our model provides a greater latitude to understand and interpret real world phenomena. We end with some comments on the role of the contracting framework. If project quality and cost are available for contracting upon but the agents are risk averse, the conventional insight that task complementarity favors bundling holds true. On the other hand, if agency problem stems from limited liability, or if the contract is incomplete to a certain degree (non-contractible or interim contractible) and ex post bargaining is unavoidable, it is possible that task complementarity favors unbundling. The lesson is that when delegating public project to private sectors, the government should condition her decisions on the features of contracting environment and agency problem.

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