When Does a Public-Private Partnership (PPP) Lead to Inefficient Cost Management?

Download or read book When Does a Public-Private Partnership (PPP) Lead to Inefficient Cost Management? written by Sounman Hong and published by . This book was released on 2015 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine whether a public-private partnership (PPP) improved the operational cost efficiency of Korea's urban rail system. Results suggest that private participation did not reduce service operation costs. We explain how the absent cost advantage may be connected to the two characteristics defining a typical PPP: activity bundling and public-private risk sharing. We argue that if negative externalities exist between the project company and shareholders, public-private risk sharing may weaken the concessionaire's cost management incentives.