Public-Private Monopoly

Moszoro, Marian (2018): Public-Private Monopoly. Published in: The B.E. Journal of Economic Analysis & Policy , Vol. 18, No. 2 (April 2018): pp. 1-13.

Abstract

This paper presents comparative statics of organizational modes of natural monopoly in public utilities with a focus on co-ownership and co-governance. Private monopoly lowers output and increases the price to maximize profit; public monopoly incurs higher costs due to the lack of know-how; and a regulated monopoly results in regulation costs to overcome informational asymmetries. A public-private partnership arises as an efficient organization mode when it enables the internalization of private know-how and saves regulation costs due to correspondingly sufficient private and public residual control rights. Public-private partnerships support higher prices than marginal costs due to rent sharing, with its upper price frontier decreasing in private residual control rights.

• Item Type: MPRA Paper
• Language: English
• Keywords: Natural Monopolies, Operating Efficiency, Public-Private Partnerships, Organization Structure, Regulation
• Subjects: L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L22 - Firm Organization and Market Structure; L - Industrial Organization > L3 - Nonprofit Organizations and Public Enterprise > L32 - Public Enterprises ; Public-Private Enterprises; L - Industrial Organization > L4 - Antitrust Issues and Policies > L43 - Legal Monopolies and Regulation or Deregulation; L - Industrial Organization > L5 - Regulation and Industrial Policy > L51 - Economics of Regulation

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