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Partial Privatization and Incomplete Contracts: The Proper Scope of Government Reconsidered Author info | Abstract | Publisher info | Download info | Related research | Statistics Patrick W. Schmitz
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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 suboptimal, 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 rivatization (too strong incentives for the manager to reduce costs).
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Article provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv .
Volume (Year): 57 (2000)
Issue (Month): 4 (August)
Pages: 394-
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Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200108)57:4_394:ppaict_2.0.tx_2-qContact details of provider: Web page: http://www.mohr.de/fa
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Find related papers by JEL classification: L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Boundaries of Public and Private Enterprise; Privatization; Contracting Out H82 - Public Economics - - Miscellaneous Issues - - - Governmental Property D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
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