TAILIEUCHUNG - Public-Private Partnerships for the Provision of Public Goods: Theory and an Application to NGOs *

Forests ecosystems provide a multiplicity of goods and services of crucial ecological, social and economic importance for the sustainability of our society. Forest goods and services represent the benefits that human populations derive, directly or indirectly, from forest ecosystems functions (MEA 2005) and are therefore an inherently anthropogenic concept, since it is the presence of human beings as valuing agents that enables the translation of the basic ecological structures and processes of forests into value-laden entities. . | Public-Private Partnerships for the Provision of Public Goods Theory and an Application to NGOs By Timothy Besley and Maitreesh Ghatak This draft 6 August 1999 DEDPS No. 17 August 1999 The Development Economics Discussion Paper Series The Suntory Centre The Suntory and Toyota International Centres for Economics and Related Disciplines London School of Economics Houghton Street LONDON Wc2A 2AE Tel 0171 955 6698 We thank Abhijit Banerjee Pranab Bardhan Eli Berman Maitreya Ghatak Semanti Ghosh Oliver Hart Karla Hoff Raol Hopkins Alain de Janvry Joseph Kabowski Michael Kremer Andreas Lehnert David Lewis Rohini Pande Priya Ranjan Elizabeth Sadoulet and seminar participants at Berkeley EBRD LSE Princeton Toulouse and the NEUDC 1998 Conference at Yale for helpful comments and suggestions. The usual disclaimer applies. Public-Private Partnerships for the Provision of Public Goods Theory and an Application to NGOs By Timothy Besley and Maitreesh Ghatak This draft 6 August 1999 Abstract This paper analyzes the role of public and private responsibility in the provision of public goods. We emphasize that a typical public good will require many different inputs which raises the possibility of partnerships to exploit comparative advantages of different parties. But hold-up problems due to contractual incompleteness in specifying tasks discourage separation of ownership and management. We extend our analysis to examine the role of project design or ideology as a separate non-contractible input and the possibility of crowding out in the form of a less caring government being elected because of the presence of private providers. The main application developed here is to NGOs in developing countries which in the last two decades have been increasingly involved in various capacities in the provision of a wide range of public goods and services. Keywords Public Goods non-governmental organizations incomplete contracting partnerships. JEL classification D23 H4 L3 O12 by Timothy Besley

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