Public-Private Partnerships for the Provision of Public Goods: Theory and an Application to NGOs

This paper analyzes the role of public and private responsibility in the provision of publicgoods. We emphasize that a typical public good will require many different inputs whichraises the possibility of partnerships to exploit comparative advantages of different parties.But hold-up problems due to contractual incompleteness in specifying tasks discourageseparation of ownership and management. We extend our analysis to examine the role ofproject design or “ideology” as a separate non-contractible input, and the possibility ofcrowding out in the form of a less caring government being elected because of the presenceof private providers. The main application developed here is to NGOs in developingcountries which, in the last two decades, have been increasingly involved in variouscapacities in the provision of a wide range of public goods and services.[...]