Advocates have offered many arguments to show that PPPs may help governments provide infrastructure more efficiently. One argument is that PPPs relieve budgetary restrictions and release public funds. Second, because financing of the project is private, it is subject to the discipline of the financial market, which leads to important efficiency gains. A third argument is that PPPs can mimic a competitive market, since they are often adjudicated in competitive auctions. Fourth, even though user fees can be charged under public provision and under PPPs,
A standard argument in favor of privatization is that private firms are more efficient than state-owned enterprises. This argument does not apply when comparing public-private partnerships to public provision because…governments rely on private firms to build, maintain, and operate infrastructure under both organizational forms.
the fact that there is at least one interested party in setting profitable tolls under PPPs balances the political pressures to lower fees. A fifth argument is that PPPs should help filter out wasteful projects. Sixth, various arguments have been given to justify PPPs on distributional grounds. We review and weigh each of these arguments next. Several contain myths that should be dispelled.