Public-Private Partnerships versus Traditional Procurement: Innovation Incentives and Information Gathering

Abstract

In the last 15 years, public-private partnerships have become an increasingly popular method to let the private sector provide public infrastructure-based services in various sectors such as health care, education, and transportation. As has been pointed out by Hart (2003), a key property of a public-private partnership is the fact that facility construction and subsequent service provision are bundled and assigned to a single private-sector entity. An often heard argument in favour of public-private partnerships is that bundling encourages innovative design solutions during the construction phase that may reduce the subsequent costs of service delivery.