민자유치의 사회후생기준

Cost-Benefit Criterion for Private Funding of Public Infrastructure

In response to its continuing difficulty in increasing capital spending under control, the Korean Government has tried to attract more funding from the private sector into public sector infrastructure pro-jects. The introduction of the Min- Ja-Yu-Chi(in Korean) Law, which made its debut in 1994, was intended to enable the government to take some measures for offering private sector companies various types of government subsidies. This article examines cost-benefit criterion for private funding of public pro-jects, evaluating the critical subsidy rate which implies how much subsidies the government can provide without welfare loss. The analysis includes not only the actual inputs and outputs of the project but also the effects of financing the pro-ject, cost and benefit of a public project being evaluated in terms of the total effect that the project has on private consumption. The relation between the sources of finance and the value of public projects was examined by Feldstein(1973, 1974) and Musgrave (l984), having been long a neglected area in cost-benefit literatures.