Government versus Private Ownership of Public Goods: Experimental Evidence

Patrick Schmitz and David Kusterer

No 13204, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Who should own public projects? We report data from a laboratory experiment with 480 participants that was designed to test Besley and Ghatak's (2001) public-good version of the Grossman-Hart-Moore property rights theory. Consider two parties, one of whom can invest in the provision of a public good. The parties value the public good differently. Besley and Ghatak (2001) argue that more investments will be made if the high-valuation party is the owner, regardless of whether or not this party is the investor. While our experimental results provide support for the Grossman-Hart-Moore theory, they cast some doubts on the robustness of Besley and Ghatak's (2001) conclusion.

Keywords: Property rights; Public goods; Incomplete contracts; Investment incentives; Laboratory experiments (search for similar items in EconPapers)
JEL-codes: C92 D23 D86 H41 L33 (search for similar items in EconPapers)
Date: 2018-09
New Economics Papers: this item is included in nep-cta, nep-exp and nep-ppm
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