Public versus private ownership: The federal lands case

“Privatization” of public lands has been urged on the grounds that it will provide a more efficient allocation of the nation's resources. However, there are some public policy objectives which private ownership and free markets are not equipped to achieve. Historically, these objectives have motivated legislation authorizing retention of some land in public ownership. Indeed, land in both forms of ownership is required to achieve a full range of both public and private goods and services. However, since inefficiencies in the allocation of resources will occur under either form of ownership, careful monitoring of economic activities in both sectors is more likely to achieve improvements than arguing for exclusive reliance on only one system of property rights.     

Public versus private production and economies of scale

The cost of producing the same good often differs substantially for public and private producers. We investigate the effect of organization in a case where the production technology is simple: The cleaning of Danish schools. Three forms of organization are used: Decentral municipal, central municipal or private. For small schools the organizational form has little impact on cost. For larger schools decentral municipal production is the most expensive. On average centralization reduces costs by 5%, while privatization reduces costs by 30%. Similar cost differences are reported in the literature for other cases, but it is a new result that the cost differences are due to economies of scale. Public choice theories predict that cost differences are due to ownership or competition. We find evidence that both theories help explain the cost differences.     

Public and private sector wages interactions in a general equilibrium model

It is common wisdom that public sector wages are not determined in the same way as private sector wages. At the same time, the empirical evidence available for OECD countries finds a strong positive correlation between public and private sector wages. In this paper, we develop a model that is consistent with a political economy view of the determination of public sector wages and employment, while being consistent with the said empirical evidence. Public finance constraints are crucial: In booms, governments expand employment and wages, while in downturns, lack of tax revenues forces the government to cut back the wage bill.     

Public support for private R&D: The case of the research tax credit

The U.S. government has long included in its tax code various special provisions designed to stimulate industrial R&D. In 1981, those provisions were substantially augmented by a special R&D tax credit, and various proposals are now under consideration to relax the antitrust statutes in order to encourage research through joint ventures. The case for any of these measures is difficult to establish, being based on assumptions that are not readily tested in objective terms. Nevertheless, one point is fairly clear: As between stimulating industrial R&D by individual firms and stimulating R&D joint ventures of such firms, the joint venture approach appears superior in its likely results.     

Strategic planning for state enterprise performance in Africa: Public versus private options

This article presents methodologies to assist government officials in various African countries who have to deal with ill-defined policy problems arising out of perceived performance shortcomings on the part of state enterprises. It reviews the historical role and record of state enterprise in African economies, the assumptions and major arguments of the ‘privatization option’ and the major forms in which the latter may be carried out. In a situation where debate has tended at times to generate more heat than light, the approach is a pragmatic one, involving careful review of all policy alternatives, including public enterprise rehabilitation and a step by step application of privatisation feasibility analysis in cases where public enterprise rehabilitation proves unviable.     

Public sector efficiency: An international comparison

We compute public sector performance (PSP) and public sector efficiency (PSE) indicators, comprising a composite and seven sub-indicators, for 23 industrialised countries. The first four sub-indicators are “opportunity” indicators that take into account administrative, education and health outcomes and the quality of public infrastructure and that support the rule of law and a level playing-field in a market economy. Three other indicators reflect the standard “Musgravian” tasks for government: allocation, distribution and stabilisation. The input and output efficiency of public sectors across countries is then measured via a non-parametric production frontier technique. The study finds significant differences in PSP and PSE, which suggests a large potential for expenditure savings in many countries.     

Employment service: Public or private?

This paper deals with the relative performance of private and public employment services. For this purpose, two behavioral models are developed which take into account that private and and public employment agents not only pursue different aims but also face different restrictions, in particular since a public employment agency lacks the right to reject applicants. While analysis of the necessary optimality conditions yields tentative conclusions about the advantages and disadvantages of both types of employment service, empirically testable hypotheses result from the predicted responses to increases in unemployment and in the cost of service, respectively. These predicted behaviors are likely to be considered unfair by society, causing dissatisfaction with both private and public employment agencies.     

The role of the state in enabling private sector development: an assessment methodology

There are many ideas about how the state can and should enable private sector development. However, most of these ideas are not derived from the private sector itself. Participatory policy research has so far been confined to public sector development contexts. This article provides some background information about the garment and textile industry in Zimbabwe. It then describes one pioneering attempt to develop and assess an enabling state assessment methodology in this context, for possible use in the private sector more generally. The methodology described consists of a series of participant‐developed checklists, around the predetermined themes of the policy, agency and enterprise environments. These checklists were explored through the use of semi‐structured dialogue, using visual methods such as impact diagramming, Venn diagramming, master charts and problem trees, in the context of enterprise‐based meetings and two subsequent workshops. The article summarizes the main constraints and recommended actions identified by the participants. The participants, the researchers and the author also assess each step of the methodology.These steps include: developing an agenda; designing the process; identifying a target population and research team; developing and applying the methodology; analysing the results and documenting the process. Lessons are also drawn from this assessment for each stage of the methodology. This article concludes with a discussion about the transferability of the methodology and the need to experiment with other methodologies. The final section also draws out the differences and similarities between this and other types of participatory policy research. Copyright © 2000 John Wiley & Sons, Ltd.     

Privatizing the housing sector: The case of Slovakia

The events of the 1980s generated the end of an era in central Europe—an era characterized by central, planned economies and totalitarian political structures. As each new country struggled to create democratic political processes and market economies, many problems emerged; one of the most vexing was the privatization of housing. In Slovakia, individual family housing had never been nationalized, leaving most of the rural and village families owning their own homes. Apartment houses, as well as multiple dwellings and estates, however, had been nationalized. Consequently, the state created a Restitution Act early on (1990), so that people could reclaim properties unjustly taken from them. In addition, the state had built considerable housing units (usually high-rise apartment blocks); many of these units were simply rented to individual families. But there had also been state construction companies that operated as co-operatives, such that rent payments were credited toward the eventual ownership of the housing. Lastly, many large industries (state owned) had built housing units, which they rented to their employees. But there were not nearly enough housing units, and many people, especially young people, newlyweds, and elderly, were on waiting lists for housing. In all cases ‘rent’ was almost negligible as were utilities, and since there were no taxes or insurance, the total amount of a family budget spent for housing was, on average, quite meagre. This, then, was the situation confronting the new government in 1990. Beginning with data from 1988, this article examines the economic restructuring, apartment construction, changes in proprietary relations, and issues as yet unresolved regarding the privatization of housing in Slovakia.     

The future of the nonprofit sector: Its entwining with private enterprise and government

The nonprofit sector—neither private enterprise nor governmental—is growing rapidly, and not only in the United States. This article explores three questions about the sector, which includes large elements of such service industries as universities, hospitals, nursing homes, day-care centers, museums, social services, and organizations promoting medical research, environmental protection, and the arts. These questions are: (a) Why is the nonprofit sector expanding worldwide?; (b) How is the growth of nonprofits affecting other parts of the economy?; and (c) What evidence is there that nonprofits make a difference, that they perform functions which private firms or government cannot perform? A major theme is that the sector's growth necessitates finding ways to increase revenues, and that has brought side effects, particularly as nonprofits have become more and more “commercial.” In the process, borders between the nonprofit and both the for-profit and public sectors are being crossed increasingly, and with consequences that often pose problems.     

Deteriorating public and private sector relations in Central America

The Central American countries are divided by profound political differences. Yet surprising similarities exist in the changing relations between the public and private sectors. Throughout the region, public and private sectors lock into a vicious circle. The inability of the state to provide order and social harmony creates disincentives for the private sector to invest or even to continue existing levels of production. The government responds by increasing its responsibilities at the expense of the private sector. In doing so it assumes risks the private sector refuses, but further alienates the private sector nonetheless.     

Public choice in private markets

He has written widely on social and economic issues.     

Ethical discontinuities in public—private sector negotiation

One problem in dispute settlement negotiations between public and private sector agents is a lack of congruence in the behavioral norms the parties consider appropriate. This normative dissonance may be seen as a problem of professional ethical discontinuity. The implementation and enforcement of Superfund, in which public sector engineers negotiated with private sector lawyers, illustrates this problem. Suggested remedies include addressing the negotiation process in professional codes of ethics, avoiding professional mismatches, better training for negotiators about the ethical discontinuity problem and, in the public health setting, improving alternatives to negotiated agreements.     

Public sector unions and public spending

This study examines the influence of public sector unions on the expansion of the public sector. Based on public goods theory, our paper models how unions influence the supply of and demand for public sector activities. On the demand side, public sector unions are special interests which advocate public sector expansion to policy makers; on the supply side, they exert pressure to maintain and expand monopoly powers. Empirical evidence supports the hypothesis that a positive relationship exists between public sector unionism and public spending.     

Pricing in the nuclear power industry: Public or private interest?

This paper tests empirically the Ramsey version of the public-interest theory of regulation by examining the pricing practices in the nuclear power industry, using a 1985 cross-sectional sample of 40 electric utilities. Other researchers have avoided this segment of the industry because of difficulties with nuclear fuel data, or perceived differences in the underlying production function. We show that regulators respond to political influences according to the Stigler-Peltzman version of regulation and that Ramsey pricing cannot be validated, at least for the nuclear segment of the electric power industry.