Success Factors for Public Private Partnership: Cases in Alpine Tourism Development

By Weiermair, Klaus; Peters, Mike et al. | Journal of Services Research, February 1, 2008 | Go to article overview

Success Factors for Public Private Partnership: Cases in Alpine Tourism Development


Weiermair, Klaus, Peters, Mike, Frehse, Joerg, Journal of Services Research


PUBLIC-PRIVATE PARTNERSHIPS: PREREQUISITES AND KEY SUCCESS FACTORS

Before discussing specific aspects and details of public-private partnerships in tourism a few definitions may be in order: Companies which hold both private and public (government owned) assets are usually labelled mixed companies. Public-private partnerships (PPPs) are specific types of coownership and/or co-operation between public institutions and private enterprises which are formed due to some synergetic advantages and which usually share both risks and profits. Usually, the foundation is a contractual agreement between the public sector and profit oriented organisations. The majority of public-private partnerships are to be found in the development, financing and implementation and management of infrastructures (Muhm, 1998). Hence, many examples of private public partnerships can be found in the construction industry (e.g. highway construction, train stations, etc.), in energy industries where high cost/risk power plants have to be erected or in the area of waste management. Other, infrastructure projects in the field of leisure and tourism are e.g. mega sports events such as Olympic Games or world championships, national parks, a national CRS or the creation of a new museum or art gallery.

PPPs cannot be interpreted as just another form of privatization; for governments in these projects usually still assert a high influence and control over properties and management processes. Forms of PPPs can vary appreciably: e.g. service or management contracts, where public property is managed through private institutions, or BOTs (Build, Operate, Transfer) which are long-term contracts to construct and run public and privately owned infrastructure. A full list of possible configurations can be seen below in table 1.

PPPs often represent policy solutions to market failures, a concept which effectively underpins and is germane to a large set of resource questions in environmental economics. Here, the inability of markets (where normally demand and supply are determined by price) in providing specific and optimal environmental goods arises essentially from the public good nature of air, land and/or water resources. The economic literature discusses three forms of market failure (Sinclair & Stabler, 1997: 178):

* Public goods: The natural and some man-made environments cannot be excluded from public (free) consumption or enjoyment. Examples range from street lighting to access to mountains or beaches. Typically, the private sector has little or no incentive to supply such goods or services as it is difficult to exclude free riders. The free rider problem remains even where a partial exclusion is possible: e.g. some individuals may consume these goods or services based on a voluntary scheme. In short, in adequate quantities, the private sector has no incentives to supply such goods or services.

* Externalities: They are an inseparable consequence of the nature of public goods. Free access frequently leads to an over-use and deterioration (e.g. erosion of footpaths, ski runs, fragile ecosystems, pollution, waste etc.).

* Distribution: Another market failure is the distribution problem. The Rio declaration in 1992 has identified concern for poorer nations of the world and the differences in opportunities and lifestyle of the rich and poor. Intra and intergenerational inequalities are typical distribution problems: private investments usually ignore distributional issues, particularly as regards their environmental impact. Intra-generational conflicts in tourism are well known, e.g. in the form of construction of roads or tourism entertainment parks where the benefit accrues only to a fraction of society. Distributional market failures can also occur between two generations where present market activities of private enterprises are not considering the effects of their action upon later generations.

* Information asymmetries: The new economy boom in the U. …

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Success Factors for Public Private Partnership: Cases in Alpine Tourism Development
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