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Encouraging Private Ownership of Public Goods: Theory and Evidence from Belgium

Author

Listed:
  • Gani Aldashev

    (CRED and Department of Economics, University of Namur, and ECARES, ULB)

  • François Libois

    (CRED and Department of Economics, University of Namur)

  • Joaquín Morales Belpaire

    (CRED and Department of Economics, University of Namur)

  • Astrid Similon

    (CRED and Department of Law University of Namur)

Abstract

We study short-run and long-run effects of a government subsidy to private nonprofit ownership of public good projects. In a simple model, we show that the subsidy increases the prices of project assets in the short run; however, the effect does not persist and prices decline in the long run. This happens because the subsidy temporarily relaxes the resource constraint of non-profit organizations, which allows them to engage in supply-expanding activities. We test this prediction using a unique dataset that we have constructed from Belgian notarial land-transaction records and exploiting a policy reform in public subsidies for land purchases by non-profits aiming at creating privately owned natural reserves. Using the MS-estimation method (Maronna and Yohai, 2000) robust to outliers, we also provide a methodological contribution to the analysis of markets with quasi-donations.

Suggested Citation

  • Gani Aldashev & François Libois & Joaquín Morales Belpaire & Astrid Similon, 2014. "Encouraging Private Ownership of Public Goods: Theory and Evidence from Belgium," Working Papers 1408, University of Namur, Department of Economics.
  • Handle: RePEc:nam:wpaper:1408
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    non-profit organizations; public goods; fundraising; land markets; natural reserves; conservation;
    All these keywords.

    JEL classification:

    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • N5 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources

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