(ROYAL INSTITUTE OF TECHNOLOGY DEPARTMENT OF REAL ESTATE AND CONSTRUCTION MANAGEMENT, 2016)
Babak Navid
Due to the increasing amount of private-public partnership procurements, the pros and cons of this
subject area is of great concern for economists and stakeholders. Previous studies regarding the
rationale of this type of procurement argued on the externalities of private-public partnership. Most
arguments were upon the negative externalities, which can reduce the private-public partnership’s
value. In this thesis, externalities in private-public partnership for infrastructure projects are
explained by using operation and maintenance, and user’s quality in more detail and compared in
different situations. This study carries that with having positively correlated qualities, the private
sector will have maximum profit and by having uncorrelated qualities, and the private sector will
have more profit compared to negatively correlated qualities. Furthermore the ways to design
optimal contract for public sector, which gives the incentive to the private sector to enhance quality
and reduce life-cycle costs, is analyzed.