Incomplete Contracts and Optimal Ownership of Public Goods

  title={Incomplete Contracts and Optimal Ownership of Public Goods},
  author={P. Schmitz},
  journal={CEPR Discussion Paper Series},
  • P. Schmitz
  • Published 2012
  • Business, Economics
  • CEPR Discussion Paper Series
The government and a non-governmental organization (NGO) can invest in the provision of a public good. In an incomplete contracting framework, Besley and Ghatak (2001) have argued that the party who values the public good most should be the owner. We show that this conclusion relies on their assumption that the parties split the renegotiation surplus 50:50. If the generalized Nash bargaining solution is applied, then for any pair of valuations that the two parties may have, there exist… Expand
11 Citations


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