We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.
We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.
Published online by Cambridge University Press: 14 April 2022
The appropriate choice between business and public enterprise is determined by the interaction between a financial time horizon and the product or project’s economic life. The prevailing interest rate defines a precise credit time horizon which is a temporal outer bound for commercial enterprise. Projects which need longer to break even cannot be funded by business alone. Long-term projects face uncertainty and attempts to control it by means of rigid contracts lead to inferior outcomes. A ‘franchise’ overcomes the temporal boundary. Protection from uncertainty is provided by social and government agencies. Investment ‘manias’ set aside time horizons and can leave a legacy of real assets. Public–private partnerships for infrastructure development are a franchise intended to overcome credit time horizons. They were embraced by New Labour, but have given rise to inefficiency and corruption and are currently in decline. The time-horizon model undermines the standard argument for market superiority. It turns Hayek on his head: it is financial markets that require certainty, whereas social and public agencies manage in its absence.
To save this book to your Kindle, first ensure no-reply@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.
Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.
Find out more about the Kindle Personal Document Service.
To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.
To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.
