Using Public-Private Partnerships for Political Reasons: The Government’s Motivation and Conditions

Original study by Yanbing Han & Hai (David) Guo

This paper studies the political nature of PPPs to explain how they can be used to serve political objectives.  It also examines the conditions under which these motivations are stronger for policy makers.  The study uses U.S. state-level data to explore these questions.

The authors develop an analytic framework (a political agency model) that maps out the political motivation to use PPPs as well as political and fiscal conditions that impact their initiation.  The analytic framework is based on principal-agent theory and views government decision-makers as predominantly “egoistic, rational, utility maximizers” who are motivated by (a) the objective of re-election and (b) seeking economic rents (i.e. unjustified benefits).