GOVERNMENT VERSUS PRIVATE OWNERSHIP OF PUBLIC GOODS

There has been a dramatic change in the division of responsibility betweenthe state and the private sector for the delivery of public goods and services inrecent years with an increasing trend toward contracting out to the private sectorand “public-private partnerships.” This paper analyzes how ownership matters inpublic good provision. We show that if contracts are incomplete then the ownershipof a public good should lie with a party that values the benefits generated byit relatively more. This is true regardless of whether this party is also the keyinvestor, or other aspects of the technology.[...]