Public-private Monopoly
Abstract: This paper presents comparative statics of organizational forms of natural monopoly in public utilities with a focus on co-ownership and co-governance. Private monopoly lowers output and increases price to maximize profit. Public monopoly incurs higher costs due to the lack of know-how. 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 ownership and control.
