Public Ownership in the American City

Edward Glaeser

No 8613, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: American local governments own and manage a wide portfolio of enterprises, including gas and electricity companies, water systems, subways, bus systems and schools. Existing theories of public ownership, including the presence of natural monopolies, can explain much of the observed municipal ownership. However, the history of America's cities suggests that support for public ownership came from corruption then associated with private ownership of utilities and public transportation. Private firms that either buy or sell to the government will have a strong incentive to bribe government officials to get lower input prices or higher output prices. Because municipal ownership dulls the incentives of the manager and decreases the firm's available cash, public firms may lead to less corruption. Public ownership is also predicted to create inefficiency and excessively large government payrolls.

JEL-codes: R (search for similar items in EconPapers)
Date: 2001-12
New Economics Papers: this item is included in nep-cdm, nep-mic and nep-pub
Note: EFG LE PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Published as Schwartz, A.E. (ed.) Urban Issues and Public Finance: Essays in Honor of Dick Netzer. Northampton, MA: Edward Elgar Publishing Inc., 2004.

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