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Government versus private ownership of public goods: The role of bargaining frictions
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Government versus private ownership of public goods: The role of bargaining frictions

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  • Schmitz, Patrick W.

Abstract

The government and a non-governmental organization (NGO) can invest in the provision of a public good. Who should be the owner of the public project? In an incomplete contracting model in which ex post negotiations are without frictions, the party that values the public good most should be the owner, regardless of technological aspects. However, under the plausible assumption that there are bargaining frictions, the optimal ownership structure depends on technological aspects and on the parties' valuations. We show that the differences between incomplete contracting models with public goods and private goods are thus smaller than has previously been thought.

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  • Schmitz, Patrick W., 2015. "Government versus private ownership of public goods: The role of bargaining frictions," CEPR Discussion Papers 10686, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:10686
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    Cited by:

    1. Song, Jinbo & Zhao, Yunpeng & Jin, Lulu & Sun, Yan, 2018. "Pareto optimization of public-private partnership toll road contracts with government guarantees," Transportation Research Part A: Policy and Practice, Elsevier, vol. 117(C), pages 158-175.
    2. Müller, Daniel & Schmitz, Patrick W., 2017. "Optimal ownership of public goods in the presence of transaction costs," Economics Letters, Elsevier, vol. 152(C), pages 88-92.
    3. Cui, Yi & Du, Xiaodong & Ma, Jiujie, 2020. "Agricultural Water right reforms and Irrigation Water Demand: A Quasi-Natural Experiment in China," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304364, Agricultural and Applied Economics Association.
    4. Schmitz, Patrick W., 2021. "Optimal ownership of public goods under asymmetric information," Journal of Public Economics, Elsevier, vol. 198(C).
    5. Schmitz, Patrick W., 2017. "Incomplete contracts, shared ownership, and investment incentives," Journal of Economic Behavior & Organization, Elsevier, vol. 144(C), pages 153-165.
    6. Friese, Maria & Heimeshoff, Ulrich & Klein, Gordon J., 2020. "Property rights and transaction costs – The role of ownership and organization in German public service provision," International Journal of Industrial Organization, Elsevier, vol. 72(C).
    7. Lily Hsueh, 2019. "Voluntary climate action and credible regulatory threat: evidence from the carbon disclosure project," Journal of Regulatory Economics, Springer, vol. 56(2), pages 188-225, December.
    8. Ronit Mukherji, 2023. "Risk Sharing in Public-Private Partnerships," SN Operations Research Forum, Springer, vol. 4(4), pages 1-17, December.
    9. Schmitz, Patrick W. & Kusterer, David J., 2018. "Government versus Private Ownership of Public Goods: Experimental Evidence," CEPR Discussion Papers 13204, C.E.P.R. Discussion Papers.
    10. Kusterer, David J. & Schmitz, Patrick W., 2020. "Public goods, property rights, and investment incentives: An experimental investigation," Journal of Economic Behavior & Organization, Elsevier, vol. 177(C), pages 514-532.
    11. Gangqiang Yang & Yongyu Xue & Yuxi Ma, 2019. "Social Organization Participation, Government Governance and the Equalization of Basic Public Services: Evidence from China," IJERPH, MDPI, vol. 16(16), pages 1-20, August.

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    More about this item

    Keywords

    Investment incentives; Bargaining frictions; Incomplete contracts; Ownership; Public goods;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship

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