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

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 will try to summarize some recent theoretical thinking on this issue. I will divide the paper into two parts. First, I will make some general remarks about the relationship between the theoretical literature on privatization and incomplete contracting theories of the firm. Second, I will use some of the ideas from this literature to develop a very preliminary model of public-private partnerships