Analysis on the Welfare Effect of the PPP Implementation

Abstract

This study investigates the welfare implications of BTL projects using a general equilibrium model with the public sector and public-private partnerships. We show that when the government is not allowed to run budget deficits but private firms is able to overcome the financial constraint, BTL projects performed by public-private partnerships (PPPs) could be a good alternative and improve the welfare of the model economy. This paper quantitatively investigates excessive expansion of PPP projects and several alternatives to retrieve welfare losses caused by such an expansion. Assuming that future rents of BTL projects are not taken into account, we find the welfare losses up to 20 percent relative to conventional government projects. Finally, we show that it would be possible to reduce the losses by transforming the fully depreciated capital stock of the government projects into much smaller new PPP projects.

Keywords

• 민간투자사업(Public Private Partnership)
• 임대형 민간투자사업(BTL)
• 일반균형모형(General Equilibrium)
• 최적 재정정책(Optimal Fiscal Policy)
• 후생효과(Welfare Effect)