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The challenge of the commons: Estonian housing privatization

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  • Charles Scott
  • Frederick Derrick
  • Ene Kolbre

Abstract

Housing privatization directly affects each individual and raises significant questions beyond those raised in business privatization. When businesses are privatized, the responsibilities are transferred with the ownership. Housing privatization transfers the ownership of and responsibility for the benefits and costs for the internal space of a flat. However, ownership of and responsibility for the common areas and systems in the large buildings-hallways, roofs, heating, lighting, or exterior walls-are not transferred. These buildings provide a classic scenario for the tragedy of the commons. Who gets the benefits and who pays the costs? How is the externality internalized and responsibility transferred? This paper evaluates the housing privatization process in Estonia with emphasis on the problems of maintenance and the formation of dwelling owners associations. Recommendations for resolution of the tragedy of the commons are provided. Copyright International Atlantic Economic Society 1999

Suggested Citation

  • Charles Scott & Frederick Derrick & Ene Kolbre, 1999. "The challenge of the commons: Estonian housing privatization," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 5(4), pages 418-429, November.
    • Handle: RePEc:kap:iaecre:v:5:y:1999:i:4:p:418-429:10.1007/bf02295541
    DOI: 10.1007/BF02295541
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    1. Renaud, B., 1991. "Housing reform in socialist economies," World Bank - Discussion Papers 125, World Bank.
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