This paper uses Public Choice analysis to examine the case for and experience with Public-Private Partnerships (PPPs). A PPP is a contractual platform which connects a governmental body and a private entity. The goal is to provide a public sector program, service, or asset that would normally be provided exclusively by a public sector entity. This paper focuses on PPPs in developed countries, but it also draws on studies of PPPs in developing countries. The economics literature generally defines PPPs as long-term contractual arrangements between a public authority (local or central government) and a private supplier for the delivery of services. The private sector supplier takes responsibility for building infrastructure components, securing financing of the investment, and then managing and maintaining this facility.

However, in addition to those formed through contracts, PPPs may take other forms such as those developed in response to tax subvention or coercion, as in the case of regulatory mandates. A key element of PPP is that the private partner takes on a significant portion of the risk through a schedule of specified remuneration, contingency payments, and provision for dispute resolution. PPPs typically are long-term arrangements and involve large corporations on the private side, but may also be limited to specific phases of a project.

The types of PPPs discussed in this paper exclude arrangements which may result from government mandates such as the statutory emission mandates imposed on automobile manufacturers and industrial facilities (e.g., power plants). It also excludes PPP-like organizations resulting from US section 501(c)(3) of the Internal Revenue Code, which provides tax subsidies for certain public charities, scientific research organizations, and organizations whose goals are to prevent cruelty to animals or erect public monuments at no expense to the government. This paper concludes that an array of Public Choice tools are applicable to understanding the emergence, success, or failure of PPPs. Several short case studies are provided to illustrate the practicalities of PPPs. 

It has become commonplace to describe publicly provided infrastructure as being in a sorry state and to advance public-private partnership as a possible remedy. This essay adopts a skeptical but not a cynical posture toward those claims. The paper starts by reviewing the comparative properties of markets and politics within a theory of budgeting where the options are construction and maintenance. This analytical point of departure explains how incongruities between political and market action can favor construction over maintenance. In short, political entities can engage in an implicit form of public debt by reducing maintenance spending to support other budgetary items. This implicit form of public debt does not manifest in higher interest rates but rather manifests in crumbling bridges and other infrastructure due to the transfer of maintenance into other budgetary activities.

Japan’s investment in the domestic construction industry has fallen to less than half its peak in 1992. Given the country’s declining population, Japanese construction companies must go global to remain profitable. To what extent the Japanese government and Japanese companies can contribute to meeting the growing infrastructure needs in the region is unclear as Japanese companies have long been operating primarily in Japan. The Japanese government has in recent years passed a series of new laws that encourage private sector participation in financing, building and operating public infrastructure. Through involvement in such public projects, Japanese companies have developed the skills and technologies to build a variety of infrastructures that are resilient to natural disasters and adaptable to various geographical conditions and social and economic development. But the major challenge for Japanese companies is to transform their business model drastically from one that relies on the domestic market to one that contributes to the social and economic development of third countries.

A theoretical investigation of the effect of an inverse parabolic potential on third harmonic generation in cylindrical quantum wires is presented. The wave functions are obtained as solutions to Schrödinger equation solved within the effective mass approximation. It turns out that peaks of the third harmonic generation susceptibility (THGS) associated with nanowires of small radii occur at larger photon energies as compared to those associated with quantum wires of larger radii. The inverse parabolic potential red-shifts peaks of the THGS, and suppresses the amplitude of the THGS. THGS associated with higher radial quantum numbers is diminished in magnitude and blue-shifted, as a function of the photon energy. As a function of the inverse parabolic potential, the THGS still characterized by peaks, and the peaks shift to lower values of the potential as the photon energy increases.