| This is a study of public-private partnerships involving public universities and private development firms which join forces in order to expand on-campus student housing. In these partnerships, universities lease public land to private apartment management/development firms in order to increase the availability of apartment-style student housing.;Another possible outcome of these partnerships, however, is quasi-monopolistic pricing which reduces social welfare, due to the competitive advantage that is accrued from public resources. The public resources become isolating mechanisms facilitating quasi-monopoly price and non-price behavior.;Results of the study rejected the Pareto optimality hypotheses using a sample of public-private partnerships currently operating in Texas, Oklahoma and Louisiana, indicating that both ex ante and ex post agency problems exist in these partnerships.;Conclusion. The compounded agency view proposed in this study adds a new dimension to the agency theory of the firm by addressing the complexity of multiple, simultaneous conflicting interests, associated with the multiple constituency view of the firm. That is, the accountability of management to multiple stakeholders, each with potentially divergent interests, results in agency costs and corresponding strategic decisions which may only be understood by moving beyond the traditional dyadic agency relationship and incorporating the potential multiple, simultaneous accountability relationships faced by practicing managers. In this manner, the compounded agency theory provided a framework for identifying a Pareto optimal solution to the public-private partnership, and in the case of this study, successfully predicted the economic success and corresponding social welfare failure of partnership contracts which deviated from Pareto optimality.;These public-private partnerships are proposed to be Pareto efficient; that is, all parties are better off, rather than one becoming better off at the expense of the other. For example, the university administration benefits via the creation of student housing, freedom from management expenses and responsibilities, and earns new revenues from the operations of the joint venture in student housing. The private firm benefits because locating on public university land can provide a sustainable competitive advantage due to value associated with locating on the university, and the lack of an efficient market for competitors to access public land. The students benefit from an increase in the supply of student housing on campus. |
