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Public-Private Monopoly

26 Pages Posted: 24 Jan 2014 Last revised: 29 Nov 2016

Marian Moszoro

George Mason University - Department of Economics; George Mason University - Interdisciplinary Center for Economic Science (ICES); Cornell University - CPIP

Date Written: November 22, 2016

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 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 ownership and control. Public-private monopoly supports higher prices than marginal costs due to rent sharing, with its upper price frontier decreasing in private ownership.

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

JEL Classification: L22, L32, L43, L51

Suggested Citation

Moszoro, Marian, Public-Private Monopoly (November 22, 2016). 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

Cornell University - CPIP ( email )

Cornell Program in Infrastructure Policy
Ithaca, NY 14853
United States

HOME PAGE: http://www.human.cornell.edu/pam/cpip/people.cfm

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