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2018 | OriginalPaper | Chapter

Comparative Performances of Delivery Options: Empirical Lessons

Authors : Miguel Amaral, Eshien Chong, Stéphane Saussier

Published in: The Economics of Public-Private Partnerships

Publisher: Springer International Publishing

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Abstract

In this chapter, the authors propose a review of the empirical results on the relative performance (in terms of price and service quality in particular) of outsourced solutions, compared to traditional in-house delivery of public services. It also questions the role of the competitive pressure and of the choice of the type of contract to explain the relative performance. The results they present are based on articles dealing with varied sectors (water, prisons, transport, waste treatment, etc.) and varied institutional frameworks.

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previous chapter Renegotiating PPP Contracts: Opportunities and Pitfalls

next chapter Horizontal and Vertical Agreements in PPPs

Here, it should be reminded that the question of the private sector’s involvement in the management of a public service is one that is generally approached in the wrong way. Indeed, no matter which delivery option, private companies participate in the management of public services and, therefore, even in the case of in-house provision, public–private partnerships are still concluded (in this case in the form of public contracts prior to service provision). Rather, the question revolves more fundamentally around the degree of involvement of the private partners in public service management.

The economic analysis has highlighted the fact that it was possible for some characteristics associated with the production and supply of goods and services not to be compatible with an efficient running of the contracts (natural monopolies, externalities, and public goods mainly) and to require a public intervention that could take many forms (public production, regulation, etc.).

However, there is a method known as contingent valuation that can be applied in order to determine user preferences and the influence of differentiated situations on their welfare [see for instance Haywood and Koning (2012) in the case of service quality in the Parisian subway].

The success of the first citizens’ initiative “Right2Water,” which resulted in water being excluded from the new European directive on concessions (Directive 2014/23/UE), suggests that such considerations are not specific to France.

This organism was dissolved in 2008 and replaced by the Service d’observation et des statistiques (SOeS), reporting to the Commissariat général du développement durable.

It should be noted that it is also possible to develop an efficiency frontier not in terms of costs but in terms of output (i.e., physical quantities produced thanks to the inputs).

The observations used in the study come in large part from Latin America and the Caribbean (43% of the total sample), from Central Asia and Central Europe (40%), and from East Asia and the Pacific (10%). Among these observations, 836 services are provided directly (in-house provision), while 141 services rely on private sector participation.

Source: Roy and Yvrande-Billon (2007). This distribution is based on observations for the year 2002.

It should nevertheless be noted that the report by the Cour des comptes does not take into account all penal institutions.

Several urban public transport networks have gone for in-house provision since 2010. It is the case, for instance, of the French cities of Cannes, Clermont-Ferrand, Dax, Forbach, Maubeuge, Nice, Saumur, or Saint-Brieuc.

They are, for instance, difficulties associated with drawing up the contract (certain specifications, such as those of the urban public transport contract for the city of Lyon, are over 10,000 pages long), monitoring it, and, where necessary, renegotiating it.

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Title: Comparative Performances of Delivery Options: Empirical Lessons
Authors: Miguel Amaral
Eshien Chong
Stéphane Saussier
Publisher: Springer International Publishing
Book: The Economics of Public-Private Partnerships
Print ISBN: 978-3-319-68049-1

Electronic ISBN: 978-3-319-68050-7

Copyright Year: 2018
DOI: https://doi.org/10.1007/978-3-319-68050-7_7