Citation

Discussion Paper Details

Please find the details for DP7056 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Public Versus Private Ownership: Quantity Contracts and the Allocation of Investment Tasks

Author(s): Eva I Hoppe-Fischer and Patrick W. Schmitz

Publication Date: November 2008

Keyword(s): Contractible control, Incomplete contracts and Privatization

Programme Area(s): Industrial Organization

Abstract: The government wants a certain good or service to be provided. Should the required assets be publicly or privately owned or should a partnership be formed? Building on the incomplete contracting approach, we argue that the initially specified quantity of an ex ante describable basic good can have important effects on investment incentives, which has been neglected in the literature so far. We also study how the tasks of investing in quality improvements and cost reductions should be assigned. We show how the optimal contracts and governance structures depend on the exogenous parameters of the model such as the nature of the investments and the parties' bargaining powers.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7056

Bibliographic Reference

Hoppe-Fischer, E and Schmitz, P. 2008. 'Public Versus Private Ownership: Quantity Contracts and the Allocation of Investment Tasks'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7056