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Unsolicited versus solicited public partnership proposals: is there a trade-off between innovation and competition?
Gonzalo Ruiz Diaz* 
Article | Year: 2024 | Pages: 311 - 335 | Volume: 48 | Issue: 48 Received: December 12, 2023 | Accepted: May 18, 2024 | Published online: September 3, 2024
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FULL ARTICLE
FIGURES & DATA
REFERENCES
CROSSMARK POLICY
METRICS
LICENCING
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Author
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Country
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Findings
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Zawawi, Kulatunga and Tayapharan (2016)
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Malaysia
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Lack of competition in UP processes.
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Mallisetti, Dolla and
Laishram (2021)
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India
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Several flaws in their policies regarding implementation features
across the stages of UPs, such as defined objectives, absence of fees and
review timeframes in the submission, time frame and guidance on benchmarking
and market testing in the evaluation and development stages, and the time
frame for bidding and access to information in the procurement stages.
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Takano (2021)
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Peru
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Lack of competition in UP processes particularly at the subnational
government level.
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Marques (2018)
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Brazil, USA, Korea
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Success factors for UP programs: commitment and mutual help are
central to the process, robust and well-developed UP frameworks, competitive
tenders, sound governance practices and leadership of PPP units.
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Camacho, Rodriguez
and Vieira (2017)
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Brazil, Chile
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Difficulties in fostering competition (very few winners that are not proponents).
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Government's knowledge
of S (all technical solutions)
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Modality of
the PPP
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Scenarios
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Results
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Complete information
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SP
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Transfer design risk
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No new technical solution can be offered by the
proponent. Unique source of efficiency is competition.
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No transfer design risk
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No new technical solution can be offered by the
proponent. Unique source of efficiency is competition.
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UP
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Competitive tender
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No new technical solution can be offered by the
proponent. Unique source of efficiency is competition.
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Directly negotiated
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Null increase in welfare.
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Incomplete information
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SP
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Transfer design risk
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Both competition and a technical solution can be
a source of efficiency.
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No transfer design risk
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Unique source of efficiency is competition.
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UP
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Competitive tender
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Both competition and a technical solution can be
a source of efficiency.
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Directly negotiated
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Welfare enhancing effect of technical solutions
is offset with higher tariffs applied by the proponent.
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Source: World Bank (2014).
 Source: International Renewable Energy Agency (IRENA).
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Country
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Number of
unsolicited proposals
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Percentage
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Brazil
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105
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40.1
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India
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17
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6.5
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Colombia
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13
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5.0
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Peru
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10
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3.8
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Turkey
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9
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3.4
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Mexico
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8
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3.1
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Indonesia
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7
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2.7
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Jordan
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7
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2.7
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Honduras
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6
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2.3
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Philippines
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5
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1.9
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Russian Federation
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5
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1.9
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Bangladesh
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4
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1.5
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Dominican Republic
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4
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1.5
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Malaysia
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4
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1.5
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Pakistan
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4
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1.5
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Others
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54
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20.6
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Total
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262
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100.0
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Source: PPI World Bank.
Table 1Country case studies on unsolicited proposals DISPLAY Table
Table 2Results under solicited and unsolicited proposal processes with transfer design risk and competitive and non-competitive tenders DISPLAY Table
Graph 1UP and SP distribution by sector (in %) DISPLAY Graph
Graph 2UPs and SPs on renewable energy projects (in %) DISPLAY Graph
Graph 3Main mechanisms for awarding unsolicited proposals (in %) DISPLAY Graph
Figure A1SP and UP equilibrium with governmentʼs perfect information on S DISPLAY Figure
Figure A2SP and UP equilibrium under informational asymmetry DISPLAY Figure
Figure A3The effect of an increase on s, from sUP to sUPII DISPLAY Figure
Figure A4Number of patents filed globally for renewable energy technologies (in millions) DISPLAY Figure
Table A1UPs awarded by country DISPLAY Table
* I wish to express my gratitude to the editors and two reviewers for their insightful comments and suggestions. All the errors are exclusive responsibility of the author.
2 According to the World Bank (  2017a), the evidence on reducing award times is inconclusive because transaction costs of UP processes were previously higher than those of SPs.
3 For simplicity, we will base our analysis in cost reimbursement rules rather in the regulated firm model developed by Tirole and Laffont ( 1993) chapter 2.
4 An exception to this rule could be the case of countries like Brazil (see Fernandez Moreira and Sombra, 2019), that among the modalities of UP, considers the possibility that once the government identifies a public problem, it can publicly request proposals for elaborating feasibility or engineering studies.
5 Harsanyi ( 1995: 293) defines games with incomplete information generically as those in which “(...) the players, or at least some of them, lack full information about the basic mathematical structure of the game as defined by its normal form (or by its extensive form).”
6 Eventually, additional efficiencies could be captured by an SP if competition levels are superior to those achieved under PW processes; however, there is no reason a priori for assuming such a situation.
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September, 2024
III/2024
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