Ownership of the Means of Production

57 Pages Posted: 9 Mar 2016 Last revised: 20 Jan 2017

E. Glen Weyl

Microsoft Research; Yale University

Anthony Lee Zhang

Stanford Graduate School of Business

Date Written: January 18, 2017

Abstract

Private ownership creates monopoly power, harming the dynamic efficiency of asset allocation.

Common ownership improves allocative efficiency, but eliminates incentives to invest in the common value of assets. We propose a simple partial private ownership system, Harberger licensing, for public assets. Lessors self-assess a price at which they commit to sell the asset to any interested buyer and pay a tax on this price. In a calibrated dynamic trade model, setting Harberger tax rates using a simple rule-of-thumb -- half the observed turnover rate -- increases steady state value by 4.6% of asset prices under full private ownership.

Keywords: property rights, market power, investment, asymmetric information bargaining

JEL Classification: B51, C78, D42, D61, D82, K11

Suggested Citation

Weyl, E. Glen and Zhang, Anthony Lee, Ownership of the Means of Production (January 18, 2017). University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 765. Available at SSRN: https://ssrn.com/abstract=2744810

Eric Glen Weyl (Contact Author)

Microsoft Research ( email )

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Yale University ( email )

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New Haven, CT 06520-8268
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Anthony Lee Zhang

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

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