DP2725 | Government versus Private Ownership of Public Goods

Publication Date

27/03/2001

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Abstract

There has been a dramatic change in the division of responsibility between the state and the private sector for the delivery of public goods and services in recent years with an increasing trend towards contracting out to the private sector and ?public-private partnerships?. This Paper analyses how ownership matters in public good provision. We show that if contracts are incomplete then the ownership of a public good should lie with a party that values the benefits generated by it relatively more. This is true regardless of whether this party is also the key investor, or other aspects of the technology.