Government Versus Private Ownership of Public Goods: The Role of Bargaining Frictions

9 Pages Posted: 14 Mar 2019

See all articles by Patrick W. Schmitz

Patrick W. Schmitz

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

Multiple version iconThere are 2 versions of this paper

Date Written: 2015

Abstract

The government and a non-governmental organization (NGO) can invest in the provision of a public good. Who should be the owner of the public project? In an incomplete contracting model in which ex post negotiations are without frictions, the party that values the public good most should be the owner, regardless of technological aspects. However, under the plausible assumption that there are bargaining frictions, the optimal ownership structure depends on technological aspects and on the parties' valuations. We show that the differences between incomplete contracting models with public goods and private goods are thus smaller than has previously been thought.

Keywords: Ownership, Incomplete Contracts, Investment Incentives, Bargaining Frictions, Public Goods

JEL Classification: D23, D86, C78, H41, L31

Suggested Citation

Schmitz, Patrick W., Government Versus Private Ownership of Public Goods: The Role of Bargaining Frictions (2015). Journal of Public Economics, Vol. 132, 2015. Available at SSRN: https://ssrn.com/abstract=3340901

Patrick W. Schmitz (Contact Author)

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

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