Control Rights in Public-Private Partnership

Marco Francesconi () and Abhinay Muthoo ()

Economics Discussion Papers from University of Essex, Department of Economics

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.

Date: 2006-05-11
View list of references

Downloads: (external link)
http://www.essex.ac.uk/economics/discussion-papers/papers-text/dp612.pdf (application/pdf)

Related works:
Working Paper: Control Rights in Public-Private Partnerships (2006)
Working Paper: Control Rights in Public-Private Partnerships (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Ordering information: This working paper can be ordered from
Discussion Papers Administrator, Department of Economics, University of Essex, Wivenhoe Park, Colchester CO4 3SQ, U.K.
http://www.essex.ac. ... /papers-request.shtm

Access Statistics for this paper

More papers in Economics Discussion Papers from University of Essex, Department of Economics
Contact information at EDIRC.
Series data maintained by R. E. Bailey ().