Government Versus Private Ownership of Public Goods: Experimental Evidence

63 Pages Posted: 2 Oct 2018

See all articles by David J. Kusterer

David J. Kusterer

University of Cologne - Department of Economics

Patrick W. Schmitz

University of Cologne; Centre for Economic Policy Research (CEPR)

Date Written: September 2018

Abstract

Who should own public projects? We report data from a laboratory experiment with 480 participants that was designed to test Besley and Ghatak's (2001) public-good version of the Grossman-Hart-Moore property rights theory. Consider two parties, one of whom can invest in the provision of a public good. The parties value the public good differently. Besley and Ghatak (2001) argue that more investments will be made if the high-valuation party is the owner, regardless of whether or not this party is the investor. While our experimental results provide support for the Grossman-Hart-Moore theory, they cast some doubts on the robustness of Besley and Ghatak's (2001) conclusion.

Keywords: Incomplete Contracts, Investment incentives, Laboratory experiments, Property rights, Public Goods

JEL Classification: C92, D23, D86, H41, L33

Suggested Citation

Kusterer, David J. and Schmitz, Patrick W., Government Versus Private Ownership of Public Goods: Experimental Evidence (September 2018). CEPR Discussion Paper No. DP13204. Available at SSRN: https://ssrn.com/abstract=3259366

David J. Kusterer (Contact Author)

University of Cologne - Department of Economics ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

Patrick W. Schmitz

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

HOME PAGE: http://schmitz.uni-koeln.de/index.php?s=mitarbeiter&t=schmitz

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
1
Abstract Views
89
PlumX Metrics