A company must invest to provide a service to a public authority. The public authority may, once the private investment and the uncertainty regarding the value of the service have been made, provide this service by its own means. While such intervention can improve ex post effectiveness, it reduces incentives to invest ex ante and social welfare. We study different ways of the intervention of the public authority (possibility of investing only, or possibility of negotiating with the company under the threat of duplication of investment) according to the information that is available. Our results suggest that allowing the public authority to negotiate with the company improves welfare.
SAND, W., JULLIEN, B. and POUYET, J. (2018). Quel Rôle pour les Acteurs Publics dans l'Incitation Privée aux Investissements ? Revue Economique, 69(6), pp. 985-1007.