Privatization, Information and Incentives / David E. M. Sappington, Joseph E. Stiglitz.

By:

Sappington, David E. M

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w2196.Publication details: Cambridge, Mass. National Bureau of Economic Research 1987.Description: 1 online resource: illustrations (black and white)Subject(s):

E - Macroeconomics and Monetary Economics

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Abstract: In this paper, the choice between public and private provision of goods and services is considered. In practice, both modes of operation involve significant delegation of authority, and thus appear quite similar in some respects. The argument here is that the main difference between the two mod- concerns the transactions cats faced by the government when attempting to intervene in the delegated production activities. Such intervention is generally less costly under public ownership than under private ownership. The greater ease of intervention under public ownership can have its advantages; but the fact that a promise not to intervene is more credible under private production can also have beneficial incentive effects, The Fundamental Privatization Theorem (analogous to The Fundamental Theorem of Welfare Economics) is presented, providing conditions under which government production cannot improve upon private production. The restrictiveness of these conditions is evaluated.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w2196 (Browse shelf(Opens below))	Not For Loan

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Previous	nber w21957 The Effects of Trade Policy /	nber w21958 Global Cycles: Capital Flows, Commodities, and Sovereign Defaults, 1815-2015 /	nber w21959 The Bright Side of Patents /	nber w2196 Privatization, Information and Incentives /	nber w21960 A Jury of Her Peers: The Impact of the First Female Jurors on Criminal Convictions /	nber w21961 Using Lagged Outcomes to Evaluate Bias in Value-Added Models /	nber w21962 Partners in Crime: Schools, Neighborhoods and the Formation of Criminal Networks /	Next

March 1987.

In this paper, the choice between public and private provision of goods and services is considered. In practice, both modes of operation involve significant delegation of authority, and thus appear quite similar in some respects. The argument here is that the main difference between the two mod- concerns the transactions cats faced by the government when attempting to intervene in the delegated production activities. Such intervention is generally less costly under public ownership than under private ownership. The greater ease of intervention under public ownership can have its advantages; but the fact that a promise not to intervene is more credible under private production can also have beneficial incentive effects, The Fundamental Privatization Theorem (analogous to The Fundamental Theorem of Welfare Economics) is presented, providing conditions under which government production cannot improve upon private production. The restrictiveness of these conditions is evaluated.