Public Private Partnerships in Europe for Building and Managing Public Infrastructures: an Economic Perspective

Public-private partnerships (PPPs) are long term contractual agreements between the public and private sector for the provision of public infrastructures and services. Due to tighter budget constraints and to a renewed interest in a greater involvement of the private sector in the provision of public services, the deployment of PPPs is likely to grow in the near future. In this paper, we review the economic theory and the European practice of PPPs, highlighting the potential role that PPPs may play in improving the quality of public services and reducing their costs, but also identifying a number of factors that may cause performance failure.