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Public-private partnership and economic efficiency : A case study of the Korean urban rail transit system

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  • Public-private partnership and economic efficiency
  • Hong, Sounman
  • The Chartered Institute of Public Finance and Accountancy


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Title Public-private partnership and economic efficiency
Similar Titles
Sub Title

A case study of the Korean urban rail transit system

Material Type Articles
Author(English)

Hong, Sounman

Publisher

[London,U.K.]:The Chartered Institute of Public Finance and Accountancy

Date 2014-10
Journal Title; Vol./Issue Public Money and Management:
Pages 30
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic System
Territorial Development < Transport/Logistics
Holding CIPFA

Abstract

This study examines whether a public-private partnership (PPP) arrangement improved operational cost efficiency in Korea’s urban rail transit system. Overall, evidence suggests that private participation has not contributed to cost reduction in service operation. The study also explains how the absence of cost advantage in the private partnership may be associated with the two defining characteristics of a typical PPP: the bundling of different activities into a single contract and risk sharing between the public and private parties. I argue that, if negative externalities exist across the bundled activities, the risk sharing between the public and private parties may greatly weaken the concessionaire’s incentive for cost management.