Efficiency Advantages and Incentive Mechanism of PPPs: A Qualitative Comparative Analysis under the Chinese Scenario

Abstract EN

Based on the PPP efficiency system which consists of allocation efficiency, process efficiency, and individual efficiency, we use qualitative comparison analysis of fuzzy sets to study the efficiency advantages of the public-private partnership under the Chinese scenario.

The findings are as follows: (1) like public-private partnerships, Chinese-style PPPs have also failed to achieve cooperation.

(2) High allocation efficiency can be achieved if competition in bidding processes can be ensured; when bidding procedures cannot be guaranteed to compete, alternatives to high allocation efficiency are either privatized or allocated directly to enterprises that can enable economies of scale; individual effort is a source of allocation efficiency.

(3) Competition and economies of scale are necessary conditions for high process efficiency.

The private sector’s ownership of assets is a sufficient condition for high process efficiency.

(4) High individual efficiency can be achieved if individual efforts can be ensured, and high individual efficiency can also be achieved by the competition of bidding procedures or economies of scale when it is impossible to ensure high levels of individual effort.

Privatization is the perfect incentive for high individual efficiency when the competition in the bidding process, individual efforts, and economies of scale cannot be guaranteed.