Economic and Financial Reports Volume 03/2005

This paper presents the results of one of the first systematic analyses of the magnitude and determinants of transaction costs in public-private partnerships (PPPs). Given limited data availability, the analysis is confined to procurement-phase costs of bidding and contract negotiation, thus excluding costs related to contract monitoring and renegotiation in the operational phase. Notably, no attempt is made to compare transaction costs in PPPs to those in traditional public procurement of investment projects, nor to compare them to cost savings achieved through PPPs. Even so, some interesting results emerge.