Private or Public? A Taxonomy of Optimal Ownership and Management Regimes

We develop a theory of public versus private ownership based on value diversion by managers. Government is assumed to face stronger institutional constraints than has been assumed in previous literature. The model which emerges from these assumptions is flexible and has wide application. We provide a mapping between the qualitative characteristics of an asset, its main use - including public goods characteristics, and spillovers to other assets values - and the optimal ownership and management regime.