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Public goods, property rights, and investment incentives: An experimental investigation

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  • Kusterer, David J.
  • Schmitz, Patrick W.

Abstract

How should ownership rights be allocated in public-good settings? We report data from a laboratory experiment with 480 participants that was designed to test a public-good version of the property rights theory based on incomplete contracting. Consider two parties, one of whom can invest in the provision of a public good. The parties value the public good differently. In the literature it has been argued that more investments will be made if the high-valuation party is the owner, regardless of whether or not this party is the investor. Our experimental results cast some doubts on the robustness of this conclusion.

Suggested Citation

  • Kusterer, David J. & Schmitz, Patrick W., 2020. "Public goods, property rights, and investment incentives: An experimental investigation," Journal of Economic Behavior & Organization, Elsevier, vol. 177(C), pages 514-532.
  • Handle: RePEc:eee:jeborg:v:177:y:2020:i:c:p:514-532
    DOI: 10.1016/j.jebo.2020.06.009
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    More about this item

    Keywords

    Property rights; Public goods; Incomplete contracts; Investment incentives; Laboratory experiments;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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