Auctions, Ex Post Competition and Prices: The Efficiency of Public-Private Partnerships

Abstract

Using an original database concerning 1637 French local public authorities in 2001, we explore the relationships between prices charged by private operators in water contracts and ex post competition. We show that prices charged in contracts in which operators are in a monopoly situation throughout the duration of the contract, are not affected by a "competition effect" between private operators. However, a competition effect between private operators and public management appears to be crucial in explaining prices combined with a "termination effect", reflecting the fact that the contract is close to being renewed, and hence re-auctioned.

Innovation and regulatory outcomes: evidence from the public-private contracts for water supply in France

“…Therefore, the data suggest that the presence of several municipalities choosing in-house provision in the same geographical area seems to induce private firms operating in this area to conceal information. Compared to non-significant effects from inter-firm competition (PCOMP), this result suggests that competition between organizational modes (public versus private provision) may represent a more credible threat for private operators than competition captured by the number of firms (Chong et al 2006). In other words, private firms may be more afraid to be evicted and replaced by a public manager than by another private firm, and therefore they behave more strategically when faced with public providers as competitors.…”

Does market concentration affect prices in the urban water industry?

“…Some descriptive statistics can be found in Table 3. The choice of these variables is based on the previous literature (Garcia et al, 2005;Carpentier et al, 2006;Chong et al, 2006aChong et al, , 2006bMartínez-Espiñeira et al, 2009;Thorsten et al, 2009;Ruester and Zschille, 2010;González-Gómez et al, 2011) and is conditioned by the availability of statistical information.…”

“…On the other hand, Chong et al (2006b) finds that when operators control the monopoly for the entire duration of the contract, their prices are not mitigated by a direct competition effect. Furthermore, no relationship is found between the prices charged by private operators and ex post competition in water contracting.…”

“…Chong et al (2006b) acknowledged this limitation and suggested that future research overcome it by making organizational choice endogenous. This is the approach we take in our analysis by simultaneously estimating both a price equation…”

Delivering Value for Money to Government through Efficient and Effective Public Transit Service Continuity: Some Thoughts

“…Informal dimensions can also play a role. Thus, reputational concerns, perspectives of repeated transactions or, on the contrary, threats of vertical integration can help deterring ex-post opportunistic behaviours (Zupan, 1989;Chong et al, 2006). In a nutshell, these approaches highlight the need to consider hybrid governance modes, mixing formal and informal mechanisms, and encompassing ex-ante and ex-post coordination.…”