Partial Privatization and Incomplete Contracts: The Proper Scope of Government Reconsidered

Patrick Schmitz

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper it is argued that privatization is not the only alternative to public ownership. Adopting the incomplete contract approach, it is shown that partial privatization may well be the optimal ownership structure. While in the standard incomplete contract model joint ownership is usually dominated, it is shown here that joint ownership in the form of partial privatization can be optimal since it mitigates the disadvantages of public ownership (no incentives to improve quality if the manager invests or too strong incentives if the government invests) and of privatization (too strong incentives for the manager to reduce costs).

Keywords: Partial Privatization; Public Ownership; Incomplete Contracts (search for similar items in EconPapers)
JEL-codes: D23 H82 L33 (search for similar items in EconPapers)
Date: 2000
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (46)

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Related works:
Journal Article: Partial Privatization and Incomplete Contracts: The Proper Scope of Government Reconsidered (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:13447

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