This article explores the development and legislative process of concession agreements within the framework of Public-Private Partnerships (PPPs) in the EU, tracing their origins to the United Kingdom in the early 1990s. Driven by national policies, the Ministry of Finance in China has promoted PPPs in infrastructure and public services. This study focuses on the basic principles, legal nature, and general rules of EU concession agreements, aiming to provide legal strategies for Chinese franchising agreement legislation by drawing on the EU’s legislative experiences.

In many cases, the expected efficiency advantages of public-private partnership (PPP) projects as a specific form of infrastructure provision did not materialize ex post. From a Public Choice perspective, one simple explanation for many of the problems surrounded by the governance of PPPs is that the public decision-makers being involved in the process of initiating and implementing PPP projects (namely, politicians and public bureaucrats) in many situations make low- cost decisions in the sense of Kirchgässner (1948–2017). That is, their decisions may have a high impact on the wealth of the jurisdiction in which the PPP is located (most notably, on the welfare of citizen-taxpayers in this jurisdiction) but, at the same time, these decisions often only have a low impact on the private welfare of the individual decision-makers in politics and bureaucracy. The latter, for example, in many settings often have a low economic incentive to monitor/control what the private-sector partners are doing (or not doing) within a PPP arrangement. The purpose of this paper is to draw greater attention to the problems created by low-cost decisions for the governance of PPPs. Moreover, the paper discusses potential remedies arising from the viewpoint of Public Choice and Constitutional Political Economy.