TY  - JOUR
AU  - Glaeser,Edward L.
TI  - Public Ownership in the American City
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8613
PY  - 2001
Y2  - December 2001
UR  - http://www.nber.org/papers/w8613
L1  - http://www.nber.org/papers/w8613.pdf
N1  - Author contact info:
Edward L. Glaeser
Department of Economics
315A Littauer Center
Harvard University
Cambridge, MA 02138
Tel: 617/495-0575
Fax: 617/495-7730
E-Mail: eglaeser@harvard.edu
AB  - American local governments own and manage a wide portfolio of enterprises, including gas and electricity companies, water systems, subways, bus systems and schools. Existing theories of public ownership, including the presence of natural monopolies, can explain much of the observed municipal ownership. However, the history of America's cities suggests that support for public ownership came from corruption then associated with private ownership of utilities and public transportation. Private firms that either buy or sell to the government will have a strong incentive to bribe government officials to get lower input prices or higher output prices. Because municipal ownership dulls the incentives of the manager and decreases the firm's available cash, public firms may lead to less corruption. Public ownership is also predicted to create inefficiency and excessively large government payrolls.
ER  -