Private investment with social benefits under uncertainty: The dark side of public financing

Autor: Marco Buso, Kene Boun My, Giuseppe Attanasi, Anne Stenger
Přispěvatelé: Groupe de Recherche en Droit, Economie et Gestion (GREDEG), Centre National de la Recherche Scientifique (CNRS)-Université Nice Sophia Antipolis (... - 2019) (UNS), Université Côte d'Azur (UCA)-Université Côte d'Azur (UCA), Bureau d'Économie Théorique et Appliquée (BETA), Institut National de la Recherche Agronomique (INRA)-Centre National de la Recherche Scientifique (CNRS)-Université de Lorraine (UL)-Université de Strasbourg (UNISTRA), University of Padua, Institut National de la Recherche Agronomique (INRA), CODIREM, Université Nice Sophia Antipolis (... - 2019) (UNS), COMUE Université Côte d'Azur (2015-2019) (COMUE UCA)-COMUE Université Côte d'Azur (2015-2019) (COMUE UCA)-Centre National de la Recherche Scientifique (CNRS)-Université Côte d'Azur (UCA), Lille économie management - UMR 9221 (LEM), Université d'Artois (UA)-Université catholique de Lille (UCL)-Université de Lille-Centre National de la Recherche Scientifique (CNRS), Université de Strasbourg (UNISTRA)-Université de Lorraine (UL)-Centre National de la Recherche Scientifique (CNRS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Universita degli Studi di Padova, Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), ANR-12-AGRO-0007,FOR-WIND,Adaptation sylvicole et économique de l'aménagement forestier au risque vent(2012), ANR-18-CE26-0018,GrICRiS,L'innovation verte: Créativité, Risque et Contexte social(2018), COMUE Université Côte d'Azur (2015 - 2019) (COMUE UCA)-COMUE Université Côte d'Azur (2015 - 2019) (COMUE UCA)-Centre National de la Recherche Scientifique (CNRS), Université Côte d'Azur (UCA)-Université Côte d'Azur (UCA)-Centre National de la Recherche Scientifique (CNRS), Institut National de la Recherche Agronomique (INRA)-Université de Strasbourg (UNISTRA)-Université de Lorraine (UL)-Centre National de la Recherche Scientifique (CNRS), Université Nice Sophia Antipolis (1965 - 2019) (UNS), AgroParisTech-Université de Strasbourg (UNISTRA)-Université de Haute-Alsace (UHA) Mulhouse - Colmar (Université de Haute-Alsace (UHA))-Université de Lorraine (UL)-Centre National de la Recherche Scientifique (CNRS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Università degli Studi di Padova = University of Padua (Unipd)
Jazyk: angličtina
Rok vydání: 2019
Předmět:
Economics and Econometrics
Sociology and Political Science
benefit sharing
Moral hazard
Control (management)
Settore SECS-P/06 - ECONOMIA APPLICATA
Discount points
Microeconomics
crowding out
0502 economics and business
Economics
cost sharing
Settore SECS-P/03 - SCIENZA DELLE FINANZE
050207 economics
public-private contribution
Government
Public Private Partnership
Actuarial science
[QFIN]Quantitative Finance [q-fin]
05 social sciences
uncertain benefits
laboratory experiment
Investment (macroeconomics)
[SHS.ECO]Humanities and Social Sciences/Economics and Finance
moral hazard
Climate change mitigation
climate change
Public funding
13. Climate action
privately-provided adaptation public good
General partnership
Private-public contribution
050206 economic theory
Finance
Cost-sharing public intervention
Public finance
Zdroj: Journal of Public Economic Theory
Journal of Public Economic Theory, Wiley, In press, pp.1-52. ⟨10.1111/jpet.12358⟩
Journal of Public Economic Theory, Wiley, 2020, 22 (3), pp.769-820. ⟨10.1111/jpet.12358⟩
Journal of Public Economic Theory, 2020, 22 (3), pp.769-820. ⟨10.1111/jpet.12358⟩
ISSN: 1097-3923
1467-9779
DOI: 10.1111/jpet.12358⟩
Popis: In this paper we first develop a theoretical model characterized by sequential activities (initial investment and management effort) and moral hazard. The game is an interaction between two agents: the first is in charge of the two tasks that imply a cost and an uncertain ex-post benefit (private agent); the second can decide whether or not to financially contribute on the two activities knowing that the size and the probability to attain a higher surplus ex-post depend on the first agent actions (public agent). In the second part we test our model through an experiment. On the one hand, the study confirms the main results of the model related to the most efficient type and timing of government contribution to the project. On the other hand, we discover that, even in the absence of a direct link between the public contribution and the second stage of the game, the private agent strategically decide to decrease the level of effort during the second period with the aim of penalizing the public actor in the case of a low level of contribution. This behavioral result is interesting from a theoretical point of view, but even more in terms of policy implications. In fact, many investment in innovation or in climate change mitigation/adaptation are characterized by an initial investment and uncertain outcomes that depend on the management/development stage. With our study we demonstrate that a public contribution to finance the investment is not sufficient, and it can also be detrimental for what concerns the management stage and as a consequence the probability of success. What we suggest is a more interactive partnership between public and private agents that affects not just the level of investment, but it involves a more strict relation and public control in the long-term.
Databáze: OpenAIRE