Engel E., Fischer R. D., Galetovic A. (2019).

International Experience with Public-Private Partnerships in Infrastructure. Economics of Infrastructure Investment, University of Chicago Press.




Public-private partnerships, also known as PPPs, P3s and concessions, emerged in recent decades as a new organizational form to provide public infrastructure. 2 Even though public provision continues to be the dominant procurement option, investment in transport PPPs over the last 25 years has been considerable, adding€ 203 billion in Europe and $535 billion in developing countries. 3 In some countries, investment via PPPs in other types of infrastructure, such as hospitals and schools has also been signi cant. By comparison, PPP investments in the US have been relatively small. PPPs are funded by a combination of user fees and government transfers. For example, when demand is su ciently high, a toll road can be funded entirely with tolls, while government transfers are usually the main funding source for schools and hospitals. In general, under a PPP the rm nances, builds, operates and maintains the project. The contract term is long, usually of 20 to 40 years for a highway, and the facility reverts to the government when the concession ends. At that point the government can initiate a new concession, involving additional investments and revamping of the existing infrastructure, or manage the infrastructure itself.