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| Author: | Rothenberger, D. Truffer, B. |
| Title: | The limts of production efficiency analysis: new institutional economics and PSP contracts |
| Journal: | Greener Management International
2003 : SUMMER, 42, p. 21-34 |
| Index terms: | Efficiency Private sector Sanitary industry Transaction costs Water supply industry |
| Language: | eng |
| Abstract: | The provision of drinking water and sanitation is a key problem of sustainable development. In recent years private-sector participation (PSP) has been proposed as a major solution to solve efficiency problems and lack of investment in this sector. In this article, PSP contracts are analysed from a new institutional economics (NIE) perspective. The NIE approach implies that contract settings with high transaction costs lead to increased risks of opportunistic behaviour for the contract parties. In application to the water and sanitation (WATSAN) sector, it is shown that long-term contracts - which seem superior from a mere efficiency viewpoint - tend to lead to inferior solutions regarding overall welfare effects. |
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