Public-Private Partnership and Economic Efficiency: A Case Study of the Korean Urban Rail Transit System

30 Pages Posted: 5 Oct 2014 Last revised: 2 Feb 2015

Date Written: October 3, 2014

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.

Keywords: Public-Private Partnership (PPP), Urban rail transit, Privatization, Productive Efficiency

JEL Classification: L32, L51, L92, N45, N75, O18, R41

Suggested Citation

Hong, Sounman, Public-Private Partnership and Economic Efficiency: A Case Study of the Korean Urban Rail Transit System (October 3, 2014). Available at SSRN: https://ssrn.com/abstract=2505079 or http://dx.doi.org/10.2139/ssrn.2505079

Sounman Hong (Contact Author)

Yonsei University ( email )

Seoul
Korea, Republic of (South Korea)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
165
Abstract Views
1,410
rank
215,275
PlumX Metrics