Spatial diffusion of public-private partnership (PPP) in China: A county-level analysis

Abstract

This paper explores the spatial diffusion of Public-Private Partnership (PPP) in China, assessing the effects of regional boundaries, including political and functional boundaries, and transaction costs on this process. We conduct an empirical analysis using county-level panel data from 2014 to 2020 and employ a combination of geographic information system (GIS) and spatial autoregressive models to analyze the spatial factors influencing PPP diffusion in China. Our findings reveal three key points: First, local governments' PPP investment positively correlates with neighboring regions, indicating a contagious effect. Second, the contagious effect is more significant within the same urban agglomeration, demonstrating a boundary effect and illustrating the impact of spatial rescaling on spatial diffusion. Third, the contagious effect is more pronounced for PPP sectors with lower output measurement difficulty, suggesting transaction costs influence spatial diffusion. These findings offer valuable insights into barriers to spatial diffusion and strategies to promote the spatial diffusion of innovation.