Private entities motivations to participate in public-private partnerships

Abstract

The study explores the critical aspect of private entities' motivation to participate in crucial public projects through Public-Private Partnerships (PPP). The research provides significant theoretical and practical insights, grounded in Transaction Cost Theory and a unique database of PPP tenders in Poland for the 2009–2020. We examine the role of the legal form, payment model, project length, advisory participation, economic conditions and support from institutions on private side engagement in such projects. Flexible contracts, with a more balanced risk-sharing between partners positively impact private entities' interest in PPPs. Private partners tend to prefer public partners who are financially stable and are interested in projects located in more developed regions. Providing government support for public partners in PPPs can discourage private partners while subsidizing the PPP project itself has encouraged their participation.