From Stakeholders to Stockholders: A View from Organizational Theory

Abstract

The public lands exhibit many of the characteristics of a commons--overuse and charges set well below market rates. This mismanagement has been noted and criticized within government for many years, without significant actions to cure the problem. This failure is attributed to both interest group pressures and agency costs, with government officials not accountable to any owner. Privatization through disposition of these lands to stock corporations created for the purpose is explored. Corporations solve interest group problems by holding managers accountable to a single group of owners, shareholders, while dealing with other constituencies through markets and contracting at prices calculated to maximize profits. Similarly, corporations deal with agency costs through a variety of incentives and the market for corporate control. It is shown how privatizing ownership of public lands in this manner serves conservation and recreation goals by providing incentives to unbundle claims on the public lands to allow bidding by all user groups (including conservationists) who value particular aspects of these resources.

JEL Classification: L33, G32, Q28