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The organizational choice of public good provision

Author

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  • Yang, Chia-yen
Abstract
This dissertation maintains that organizational efficiency and interest competition are the two primary forces of institutional formation for the public good provision. On the one hand, efficient institutions are in principle desirable, since they bring about potential gains for the involved interests as a whole. On the other, interest conflict in distributing the potential gains may lead to the emergence of some alternatives that appear relatively inefficient. The perceived institutional inefficiency, however, comes from neglecting the fact that settling distribution disputes is frequently costly in the human society. In this dissertation, a comprehensive organizational classification is proposed in terms of ownership arrangement. This classification is comprehensive in the sense that all institutions can be categorized in a theoretically thorough framework. It facilitates the comparison of organizational efficiencies and identification of the beneficiary and harmed under main institutional alternatives. Analysis in the relative advantages/disadvantages of institutions under different situations leads to the conclusion of several general principles for the institutional patterns of the public good provision. When use exclusion is relatively easy, difficulties in market transacting or ownership exercising affect the determination of organizational arrangements, which aim at mitigating the associated difficulties. That is, total costs associated with transacting and ownership decide whether the public good provision would be done through producer-owned firms, customer cooperatives, member-controlled organizations (including governments), or nonprofits. On the other hand, non-excludability problem may be solved by tie-in transactions or by indirect transaction via a third party. Such contractual arrangements do not require direct governmental involvement. Non-excludability may also be resolved by establishing formal/informal rules for use exclusion and/or income right to the provided service. Establishment of such property right institutions always involves customer ownership of some forms. Therefore, difficulties/costs associated with collective decision-making by diverse interests serve as the key determinant to the final outcome of public good provision. Finally, the empirical study focus on three types of dams: navigation, wildlife conservation, and flood control. Based on the theory proposed in this dissertation, some hypotheses for the ownership patterns of dams are derived and tested for the evaluation of my theoretical underpinnings.

Suggested Citation

  • Yang, Chia-yen, 2000. "The organizational choice of public good provision," ISU General Staff Papers 2000010108000013664, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:2000010108000013664
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