THE ECONOMICS OF COMBINING SUBSIDY WITH PUBLIC-PRIVATE PARTNERSHIP

Guided by the principle of good management, particularly in terms of
restrictions of budget costs, public bodies in the process of granting subsidies
for public investments seek to minimize the amount of subsidies in order to
achieve equal amounts of the effects of public services. To achieve this goal,
public authorities consider the economic effects of subsidization for public
investment project, depending on the model of delivery of public project.
World practice imposes two basic models of delivery of public buildings:
the traditional delivery and the model of public-private partnership
(PPP). Certain characteristics of these two basic models have different effects
on the specific interests of the entities involved in the public investment
project, and consequently on the economic effects of subsidies.
This paper will identify specific entities in the public investment project
and their interest to participate in all phases of project preparation and implementation
through the whole lifecycle of a project along with their relationships,
interactions and instruments through which they generate specific
interests. Furthermore, qualitative method for comparison of efficiency of
these two models and determinants for management of subsidize allocation
on economical way depending on the model of delivery of public project will
be determined.
The paper shows that for the same effect of public service, smaller
amount of the subsidy needs to be submitted through PPP then through traditional
model.