Theory of Public-Private Partnership: Contract Design, Corruption and Renegotiation

Infrastructures, such as the roads that connect our cities and the water mains that deliver to our homes, serve as the backbone of society. This book investigates how policymakers can improve infrastructure procurement in the face of strategic behavior and incomplete information. Focusing on Public-Private Partnership (PPP), the book develops a theoretical framework for modeling contracts that avoid corruption and unnecessary renegotiation. The book employs tools from mechanism design, principal agent theory, and restless bandits to address possible challenges in PPPs, offering comprehensive examples of how to design models to leverage insights in real-world scenarios. The book also examines the limits of incentive design and scenarios where its power is limited. Readers will be able to directly apply these models to their research and practice and use the theories and techniques presented in the book to build their own models and inventive solutions for complex PPP problems.