Regulation and public‐private partnerships

A public‐private partnership can be seen as an appropriate institutional means of dealing with particular sources of market failure by creating a perception of equity and mutual accountability in transactions between public and private organisations through co‐operative behaviour. The relative merit of the idea of public‐private partnership is oriented mainly around a mutual benefit. As the roles of government in public‐private partnerships are not only to provide services, but also to monitor the marketplace, a well‐defined regulation framework is essential. A sound regulatory framework will increase benefits to the government by ensuring that essential partnerships operate efficiently and optimise the resources available to them in line with broader policy objectives, ranging from social policy to environmental protection. In turn, it provides assurance to the private sector that the regulatory system includes protection from expropriation, arbitration of commercial disputes, respect for contract agreements, and legitimate recovery of costs and profit proportional to the risks undertaken.