57 Pages Posted: 9 Mar 2016 Last revised: 20 Jan 2017
Date Written: January 18, 2017
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: 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