Public-Private Monopoly

B.E. Journal of Economic Analysis & Policy Vol. 18, No. 2, 2018

26 Pages Posted: 24 Jan 2014 Last revised: 6 May 2018

Marian W. Moszoro

George Mason University - Department of Economics; George Mason University - Interdisciplinary Center for Economic Science (ICES); Warsaw School of Economics (SGH)

Date Written: January 22, 2018

Abstract

This paper presents comparative statics of organizational modes of natural monopoly in public utilities with a focus on co-ownership and co-governance. Private monopoly lowers output and increases the price to maximize profit; public monopoly incurs higher costs due to the lack of know-how; and a regulated monopoly results in regulation costs to overcome informational asymmetries. A public-private partnership arises as an efficient organization mode when it enables the internalization of private know-how and saves regulation costs due to correspondingly sufficient private and public residual control rights. Public-private partnerships support higher prices than marginal costs due to rent sharing, with its upper price frontier decreasing in private residual control rights.

Keywords: Natural Monopolies, Operational Efficiency, Public-Private Partnerships, Organization Structure, Regulation

JEL Classification: L22, L32, L43, L51

Suggested Citation

Moszoro, Marian W., Public-Private Monopoly (January 22, 2018). B.E. Journal of Economic Analysis & Policy Vol. 18, No. 2, 2018. Available at SSRN: https://ssrn.com/abstract=2383309 or http://dx.doi.org/10.2139/ssrn.2383309

Marian W. Moszoro (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

HOME PAGE: http://economics.gmu.edu/people/mmoszoro

George Mason University - Interdisciplinary Center for Economic Science (ICES) ( email )

400P Truland Building
George Mason University
Fairfax, VA 22030
United States

Warsaw School of Economics (SGH) ( email )

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

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