Impressum |  Kontakt 
Siegel der Universität

Universität zu Köln
Wirtschafts- und Sozialwissenschaftliche Fakultät

Staatswissenschaftliches Seminar - Prof. Schmitz

Partial Privatization and Incomplete Contracts: The Proper Scope of Government Reconsidered

Patrick W. Schmitz

FinanzArchiv, Vol. 57 (4), 2000, 394-411.

Abstract. In this paper it is argued that privatization is not the only alternative to public ownership. Adopting the incomplete contract approach, it is shown that partial privatization may well be the optimal ownership structure. While in the standard incomplete contract model joint ownership is usually dominated, it is shown here that joint ownership in the form of partial privatization can be optimal since it prevents the disadvantages of public ownership (no incentives to improve quality if the manager invests or too strong incentives if the government invests) and of privatization (too strong incentives for the manager to reduce costs).

The working paper version is available for download at SSRN.

Further information is available here.