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| Author: | Hoppe, E.I. Schmitz, P.W. |
| Title: | Public versus private ownership: Quantity contracts and the allocation of investment tasks |
| Journal: | Journal of Public Economics
2010 : APR, VOL. 94:3-4, p. 258-268 |
| Index terms: | privatization property rights incentives private sector cost control collective bargaining |
| Language: | eng |
| Abstract: | When the government wants a certain good or service to be provided, should the needed assets be in public or private ownership or should a partnership be formed? Stemming from the incomplete contracting approach, we argue that the originally specified quantity of an ex ante describable basic good can importantly impact investment incentives, an insight so far neglected in the literature. The way of assigning the tasks of investing in quality improvements and cost reductions are also examined. We show how the optimal contracts and governance structures relate to the model's exogenous parameters, such as the nature of the investments and the bargaining powers of the parties. |
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