Munich Personal RePEc Archive

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.

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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.

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