Customer Ownership and Quality Provision in Public Services under Asymmetric Information

Luca Vittorio Angelo Colombo, Laura Abrardi, Pier Angelo Mori

Risultato della ricerca: Contributo in rivistaArticolo in rivistapeer review

1 Citazioni (Scopus)

Abstract

The implementation of projects producing external effects is often a source of disagreement and conflict between hosting and non-hosting communities. The paper focuses on the impact of participatory ownership on conflict resolution and social welfare in the presence of asymmetric information and imperfect quality monitoring. We show that in such situations the participatory solution may help solve deadlocks that money transfers to a for-profit operator cannot solve. The analysis highlights three main factors behind this fact. First, a customer-owned cooperative internalizes, at least partially, the external effects generated by the project. Second, the alignment of cooperative members' preferences with those of the social planner reduces (in some cases eliminates) the distortions caused by information asymmetries. Third, cooperatives require less costly monitoring than their for-profit counterparts. We also show that cooperatives' productive inefficiency with respect to for-profits may emerge endogenously as a consequence of their lower pressure to compete on costs for the market.
Lingua originaleEnglish
pagine (da-a)1499-1518
Numero di pagine20
RivistaEconomic Inquiry
Volume54
DOI
Stato di pubblicazionePubblicato - 2016

Keywords

  • Citizen participation
  • Cooperative firm
  • Customer-ownership
  • Nimby syndrome
  • Privatization
  • Public goods

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