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Incomplete Contracts and Public Ownership: Remarks, and an Application to Public-Private Partnerships

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  • Oliver Hart

Abstract

The question of what should determine the boundaries between public and private firms in an advanced capitalist economy is a highly topical one. In this paper I discuss some recent theoretical thinking on this issue. I divide the paper into two parts. First, I make some general remarks about the relationship between the theoretical literature of privatization and incomplete contracting theories of the firm. Second, I use some of the ideas from this literature to develop a very preliminary model of public-private partnerships.

Suggested Citation

  • Oliver Hart, 2002. "Incomplete Contracts and Public Ownership: Remarks, and an Application to Public-Private Partnerships," The Centre for Market and Public Organisation 02/061, The Centre for Market and Public Organisation, University of Bristol, UK.
    • Handle: RePEc:bri:cmpowp:02/061
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    References listed on IDEAS

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    1. Timothy Besley & Maitreesh Ghatak, 2001. "Government Versus Private Ownership of Public Goods," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(4), pages 1343-1372.
    2. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, December.
    3. Oliver Hart & Andrei Shleifer & Robert W. Vishny, 1997. "The Proper Scope of Government: Theory and an Application to Prisons," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1127-1161.
    4. Bennett, John & Iossa, Elisabetta, 2006. "Building and managing facilities for public services," Journal of Public Economics, Elsevier, vol. 90(10-11), pages 2143-2160, November.
    5. Pitchford, R. & King, S., 1998. "Private or Public? A Taxonomy of Optimal Ownership and Management Regimes," Papers 343, Australian National University - Department of Economics.
    6. Grout, Paul A, 1997. "The Economics of the Private Finance Initiative," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 13(4), pages 53-66, Winter.
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • H1 - Public Economics - - Structure and Scope of Government
    • H4 - Public Economics - - Publicly Provided Goods

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