Restitution of Cultural Goods – Loan or Ownership?

Abstract: Recent discussion on the restitution of cultural goods has focused on the form of restitution. Should cultural goods be returned as long-term loans or as permanent restitution? In this paper we explore the difference between these forms of restitution. Loan implies that the host country keeps the ownership but locates the cultural good to the country of origin. Permanent restitution shifts also the ownership to the country of origin. We find that the optimal form of restitution depends on the triggering factor. If restitution is triggered by the host country completing the restoration of the cultural good, restitution should shift the ownership to the country of origin. However, if the country of origin becomes more indispensable to the cultural good, the optimal form of restitution is a long-term loan.