Incomplete contracts and optimal ownership of public goods

Patrick Schmitz

Economics Letters, 2013, vol. 118, issue 1, 94-96

Abstract: The government and a non-governmental organization (NGO) can invest in the provision of a public good. Besley and Ghatak (2001) have argued that in an incomplete contracting framework, the party who values the public good most should be the owner. We show that this conclusion relies on their assumption that the parties split the renegotiation surplus 50:50. If the generalized Nash bargaining solution is applied, then for any pair of valuations that the two parties may have, there exist bargaining powers such that either ownership by the government or by the NGO can be optimal.

Keywords: Ownership; Incomplete contracts; Investment incentives; Public goods (search for similar items in EconPapers)
JEL-codes: D23 D86 H41 L31 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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Related works:
Working Paper: Incomplete contracts and optimal ownership of public goods (2012)
Working Paper: Incomplete contracts and optimal ownership of public goods (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:118:y:2013:i:1:p:94-96

DOI: 10.1016/j.econlet.2012.09.033

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