Working Paper: CEPR ID: DP2725
Authors: Timothy Besley; Maitreesh Ghatak
Abstract: There has been a dramatic change in the division of responsibility between the state and the private sector for the delivery of public goods and services in recent years with an increasing trend towards contracting out to the private sector and ?public-private partnerships?. This Paper analyses how ownership matters in public good provision. We show that if contracts are incomplete then the ownership of a public good should lie with a party that values the benefits generated by it relatively more. This is true regardless of whether this party is also the key investor, or other aspects of the technology.
Keywords: public goods; public ownership; public-private partnerships
JEL Codes: D73; H40; O17
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Ownership of public goods (H40) | Higher net surplus generation (H62) |
| Party with higher valuation owns asset (G32) | Maximizes joint surplus (D69) |
| Ownership of school by government (H13) | Discourages NGO contribution (L31) |
| Ownership of school by NGO (L31) | Incentivizes government to invest more (H54) |
| Ownership structure (G32) | Impacts bargaining power and investment incentives (F69) |
| Ownership of public goods (H40) | Enhances investment incentives and maximizes social welfare (H21) |