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2021 | OriginalPaper | Buchkapitel

3. Theory on PPP Renegotiations

verfasst von : Carlos Oliveira Cruz, Joaquim Miranda Sarmento

Erschienen in: The Renegotiations of Public Private Partnerships in Transportation

Verlag: Springer International Publishing

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Abstract

Renegotiations can be understood from the perspective of three main economic theories: contract theory, transaction cost theory, and institutional theory. Contract theory provides an explanation for renegotiations based on the simple fact that contracts are necessarily incomplete. The consequences of such incompleteness, is that the contract can be vulnerable to the behaviour of each agent. Transaction cost theory considers contract incompleteness to be a rational choice of the parties involved. Incompleteness arises from the fact that is simply to costly to developed quasi complete contracts. Finally, institutional theory provides a macro perspective over the process, i.e., the regulatory, economic, legal, political and institutional environment can influence and impact renegotiations.

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Vorheriges Kapitel Defining PPP Renegotiations

Nächstes Kapitel Renegotiation Analysis

Devolution in this context means to transfer to the private sector the responsibility for the provision of a service under government control.

For this discussion, we assume that the concessionaire is a unique and homogeneous entity, with a specific objective. Although it is a single entity—a Special Purpose Vehicle, in effect it is the result of several shareholders getting together with often conflicting goals and strategies, e.g., construction firms, engineering services firms, financiers (some with long-term strategies, others with short to medium-term strategies). This heterogeneity has implications at two levels: first, it adds complexity to any renegotiation process, as the private sector, or concessionaire, are in fact several entities which have to agree on the terms and proposals of the public sector, and; second, it can create conflicts and bring about another round of private-to-private renegotiations within the SPV. These issues are beyond the scope of this discussion.

In fact, one can also argue that these efficiency gains are not part of the operational risk transfer to the concessionaire.

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Titel: Theory on PPP Renegotiations
verfasst von: Carlos Oliveira Cruz
Joaquim Miranda Sarmento
Verlag: Springer International Publishing
Buch: The Renegotiations of Public Private Partnerships in Transportation
Print ISBN: 978-3-030-61257-3

Electronic ISBN: 978-3-030-61258-0

Copyright-Jahr: 2021
DOI: https://doi.org/10.1007/978-3-030-61258-0_3