Asymmetric Yardstick Competition: Traditional Procurement Versus Public-Private Partnerships

37 Pages Posted: 21 Feb 2019

See all articles by Giuseppe Di Liddo

Giuseppe Di Liddo

Università degli Studi di Bari “Aldo Moro” (UNIBA)

Annalisa Vinella

University of Bari - Department of Economics and Finance

Date Written: 2019

Abstract

We investigate yardstick competition between local jurisdictions in which pure rent-seeking incumbents undertake an identical infrastructure project choosing be- tween two contractual arrangements with different financing profiles, namely traditional procurement (TP) and public-private partnership (PPP). We show that a mixed regime, in which TP is used in one jurisdiction and PPP in the other, is likely to arise when projects are mildly lucrative, and/or jurisdictions have a moderate fiscal capacity. We find that, in the mixed equilibrium, incumbents provide different levels of public services, face different probabilities of re-election, and obtain different rents. The adoption of different forms of project governance permits incumbents to disguise themselves and undermine voters' ability to assess their performances. Therefore, yardstick competition is hindered, even if jurisdictions display identical revenue capacities.

Keywords: political yardstick competition, rent seeking, infrastructure projects, traditional procurement, public-private partnership

JEL Classification: D720, H770

Suggested Citation

Liddo, Giuseppe Di and Vinella, Annalisa, Asymmetric Yardstick Competition: Traditional Procurement Versus Public-Private Partnerships (2019). CESifo Working Paper No. 7449, Available at SSRN: https://ssrn.com/abstract=3338803 or http://dx.doi.org/10.2139/ssrn.3338803

Giuseppe Di Liddo (Contact Author)

Università degli Studi di Bari “Aldo Moro” (UNIBA) ( email )

Piazza Umberto I
Bari, 70121
Italy

Annalisa Vinella

University of Bari - Department of Economics and Finance ( email )

Piazza Umberto I
Bari, 70121
Italy
+39 080 504 93 40 (Phone)
+39 080 504 91 49 (Fax)

HOME PAGE: http://www.uniba.it/docenti/vinella-annalisa

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
83
Abstract Views
338
Rank
539,499
PlumX Metrics