The Governance of Surface Transportation in the 21st Century: Understanding the Emergence of the Public-private Partnership Model

Abstract: The objective is to identify main factors contributing to the emergence of the public-private partnership (P3) model and the modification of governance structure in transportation agencies in the United States. Surface transportation in the U.S. is experiencing a gradual transition as new sets of expectations, needs, alternatives, and constraints have emerged in the last two decades. In the meantime, the P3s, as a procurement model, gained recognition and popularity since 1995. After 20 years of experience in P3s, it is time to reflect on the past experience in order to build good foundations for the next generation of transportation. This is an exploratory research examining the institutional implication of a shift in surface transportation infrastructure from focusing only on the delivery of the physical infrastructure to the provision of services including information technology system, operations and maintenance. We conduct a case study of the experience in the State of Virginia, United States, which has been at the forefront of adopting the new provision of services in surface transportation. This makes it an ideal case for an exploratory research. We collect data on historical changes from a series of interviews with transportation practitioners in both public and private sector with over 10 years of experience in Virginia. For the analysis, we compare our findings with predictions of Transaction Cost Economics to conceptualize public authorities’ management of publicly owned assets in the face of uncertainty, opportunism, asset specificity, and information asymmetries. The finding of this paper is expected to provide insights for policymakers, regarding the possible implications of the governance practices in Virginia on how to improve the institutional framework to respond to the expanding scope of transportation services that we experience today.