Public Private Partnerships: Who Bears Demand Risk Affects Service Adaptations
Public Private Partnerships (PPPs) face challenges in adapting services to changing demands. The type of contract used affects how accountable and motivated public authorities and private providers are to make necessary adaptations. Concession contracts, where private providers bear demand risk, lead to more responsiveness from public authorities and greater effort from private providers in adapting services. Contracts where public authorities bear demand risk may not be as efficient.