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Maintenance Costs, Outside Options and Optimal Ownership of a Public Good

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  • Grosjean Pauline

    (University of San Francisco)

Abstract

There has been much attention recently to public-private partnerships and the involvement of NGOs in public good provision. This paper re-examines the effect of ownership of a public good on investment incentives when contracts are incomplete. In the presence of maintenance costs, it is shown that the leading result in the literature by Besley and Ghatak (2001) does not carry through. In some circumstances, project ownership should be allocated to the party that values the project relatively less. The model is applied to the case of environmental conservation and investigates the advantages of Payments for Environmental Services from the point of view of investment incentives in conservation.

Suggested Citation

  • Grosjean Pauline, 2010. "Maintenance Costs, Outside Options and Optimal Ownership of a Public Good," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-18, November.
    • Handle: RePEc:bpj:bejeap:v:10:y:2010:i:1:n:104
    DOI: 10.2202/1935-1682.2590
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    References listed on IDEAS

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    Cited by:

    1. Schmitz, Patrick W., 2014. "Optimal ownership of public goods reconsidered," Economics Letters, Elsevier, vol. 125(1), pages 21-24.
    2. Halonen-Akatwijuka, Maija, 2012. "Nature of human capital, technology and ownership of public goods," Journal of Public Economics, Elsevier, vol. 96(11), pages 939-945.
    3. Schmitz, Patrick W., 2015. "Government versus private ownership of public goods: The role of bargaining frictions," Journal of Public Economics, Elsevier, vol. 132(C), pages 23-31.
    4. Schmitz, Patrick W., 2024. "When Should the Government Own the Physical Assets Needed to Provide Public Goods?," CEPR Discussion Papers 19177, C.E.P.R. Discussion Papers.
    5. Schmitz, Patrick W., 2024. "When should the government own the physical assets needed to provide public goods?," Economics Letters, Elsevier, vol. 241(C).

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