Analyzing the Role of National PPP Units in Promoting PPPs: Using New Institutional Economics and a Case Study

Abstract

The global expansion of public-private partnerships (PPPs) has generated interest in establishing national PPP units for implementing or analyzing PPPs. Despite the good intentions for establishing such units, results have been mixed. Unless its role is clarified, a national PPP unit cannot be successful because it lacks adequate authority to respond appropriately to the changing environment. However, relevant research in construction journals is too limited to provide policymakers with constructive suggestions. This study aims to improve this situation by aligning a theoretical model with empirical data. The PPP activities can be analyzed as a game between the host government and private promoters trying to maximize their respective payoffs; thus, in accordance with new institutional economics (NIE) theory, a national PPP unit can be considered an endogenous equilibrium outcome of a game. On the basis of this perspective, three game (four consensus) theoretical models are constructed to find equilibriums: a single game for a single authority, repeated games for a single authority, and repeated games for government with multiple subordinate authorities. This study also uses a case study to present the history of PPPs in Taiwan and the evolutionary role of the National PPP Taskforce, Taiwan. National and international data confirm the theoretical model, which indicates that the common role of a national PPP unit is as a trust-creator between the public and private sectors. This pilot study contributes to the theoretical foundation that policymakers need to accelerate the learning process for implementing a PPP. It also provides researchers in the construction field with an NIE methodology for analyzing other governance structures in the construction field.