Theoretical debate about delegation of economic activity is centrally concerned about quality of service deliver (Hart, Shleifer, & Vishny, 1997) and the difficulty of establishing an adequate supervision capable of preventing deterioration (Cabral, Lazzarini, & de Azevedo, 2010). Quality concern is aggravated by transaction costs (Williamson, 1987, 1999, 2008), information asymmetry and moral hazard risks (Laffont & Martimort, 2002).
Building on these concerns and looking into incentive structures and agent performance, this research conducts a multiple case study focused on an uncommon opportunity: the occurrence of two different partnership models with distinguished incentives systems in the same service. Poupatempo and Unidade de Atendimento Integrado – UAI are major Brazilian regional citizen service centers programs with similar objectives that have recently employed different partnership models.
São Paulo state government applied procurement contracts to expand Poupatempo since 2007 (Fredriksson, 2015). Brazilian procurement contracts allow government to transfer construction and management of public facilities to private companies (Alcantara & Castor, 1999) and leave agent little autonomy to act. It establishes payment based on fixed installments with little performance correlation and thus results in an apparent weak performance incentive (Rosilho, 2011).
On the other hand, Minas Gerais state government developed UAI through public-private partnerships since 2011 (Majeed, 2014). PPPs allow government to delegate planning, building and operating actions on specific public infrastructure projects and leave agent more autonomy to act (Brito & Silveira, 2005; Yescombe, 2007). Differing procurement, PPP’s private partner is responsible for financing initial investment for which it is paid based on performance, generating what seems to be a stronger incentive mechanism.
To carry on this multiple case study on Poupatempo and UAI this research develops contractual analysis to identify formal incentives while evaluating agent’s performance based on result reports. On top of documents analysis, semi-structured interviews allow us to analyze non-contractible variables.
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