Machiavellian PPP? - Evidence from Italian Local Government's Projects for Public Services

Abstract

Public Private Partnerships (PPPs) have been widely advocated as flexible contractual solutions enabling the public sector to profit from private firms’ innovative solutions for providing public services. More recently, however, practitioners and academics alike have cast doubts on a possible instrumental use of PPPs. When most of the upfront investment rests on the private partner, the public counterpart may be tempted by reaping the benefit in the short-term while shifting to farther years the financial burden.If the budget accounts, especially at the Municipality level, is tight enough, such a 'Machiavelian' use of PPPs may become the privileged way to realize infrastructural facilities without any consideration of the efficiency of the provision. We test this 'public finance bias' hypothesis by using data from local projects by Italian Municipalities.