Task Interdependence And Non-contractibility In Public Good Provision

Abstract

In the context of public good provision, despite non-contractibility of investments, it is possible to specify who is in charge of tasks such as construction and maintenance. We show that complementarity between the investments of the two tasks favours unbundling of tasks through different contracts against bundling of them into a single contract, whether the built facility is privately or publicly owned. We also obtain general conditions that determine the efficiency of traditional procurement vis-a-vis public-private partnership (PPP).