@techreport{NBERw13284,
 title = "The Basic Public Finance of Public-Private Partnerships",
 author = "Eduardo Engel and Ronald Fischer and Alexander Galetovic",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "13284",
 year = "2007",
 month = "July",
 URL = "http://www.nber.org/papers/w13284",
 abstract = {Public-private partnerships (PPPs) cannot be justified because they free public funds. When PPPs are justified on efficiency grounds, the contract that optimally balances demand risk, user-fee distortions and the opportunity cost of public funds, features a minimum revenue guarantee and a revenue cap. However, observed revenue guarantees and revenue sharing arrangements differ from those suggested by the optimal contract. Also, this contract can be implemented via a competitive auction with realistic informational requirements. Finally, the allocation of risk under the optimal contract suggests that PPPs are closer to public provision than to privatization.},
}