Control Rights in Public-Private Partnerships
37 Pages Posted: 15 Aug 2006
There are 2 versions of this paper
Control Rights in Public-Private Partnerships
Date Written: June 2006
Abstract
This paper develops a theory of the allocation of authority between two parties that produce impure public goods. We show that the optimal allocation depends on technological factors, the parties' valuations of the goods produced, and the degree of impurity of these goods. When the degree of impurity is large, control rights should be given to the main investor, irrespective of preference considerations. There are some situations in which this allocation is optimal even if the degree of impurity is very low as long as one party's investment is more important than the other party's. If the parties' investments are of similar importance and the degree of impurity is large, shared authority is optimal with a greater share going to the low-valuation party. If the importance of the parties' investments is similar but the degree of impurity is neither large nor small, the low-valuation party should receive sole authority. We apply our results to a number of situations, including schools and child custody.
Keywords: impure public goods, contractual incompleteness, allocation of authority, investment incentives
JEL Classification: D02, D23, H41, L31
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
The Simple Micro-Economics of Public-Private Partnerships
By Elisabetta Iossa and David Martimort
-
Control Rights in Public-Private Partnerships
By Marco Francesconi and Abhinay Muthoo
-
Public-Private Partnerships: Task Interdependence and Contractibility
By Bin R. Chen and Y. Stephen Chiu
-
The Theory of Incentives Applied to the Transport Sector
By Elisabetta Iossa and David Martimort
-
Public versus Private Ownership: Quantity Contracts and the Allocation of Investment Tasks
By Eva I. Hoppe and Patrick W. Schmitz
-
Public versus Private Ownership: Quantity Contracts and the Allocation of Investment Tasks
By Eva I. Hoppe and Patrick W. Schmitz
-
By Eva I. Hoppe and Patrick W. Schmitz
-
By Eva I. Hoppe and Patrick W. Schmitz
-
Public-Private Partnerships: A Public Economics Perspective
By Efraim Sadka
-
Towards a Principal-Agent Based Typology of Risks in Public-Private Partnerships
By André De Palma, Guillaume Prunier, ...