Editing Non-governmental organization (section)

== Economic theory ==
The question whether a public project should be owned by an NGO or by the government has been studied in economics using the tools of the [[Incomplete contracts|incomplete contracting]] theory. According to this theory, not every detail of a relationship between decision makers can be contractually specified. Hence, in the future, the parties will bargain with each other to adapt their relationship to changing circumstances. Ownership matters because it determines the parties' willingness to make non-contractible investments. In the context of private firms, [[Oliver Hart (economist)|Oliver Hart]] has shown that the party with the more important investment task should be owner.<ref>{{Cite book|last=Hart|first=Oliver D.|url=https://www.worldcat.org/oclc/32703648|title=Firms, contracts, and financial structure|date=1995|publisher=Clarendon Press|isbn=0-19-828881-6|location=Oxford|oclc=32703648}}</ref> Yet, Besley and Ghatak have argued that in the context of public projects the investment technology does not matter.<ref>{{Cite journal|last1=Besley|first1=Timothy|last2=Ghatak|first2=Maitreesh|date=2001|title=Government Versus Private Ownership of Public Goods|url=https://academic.oup.com/qje/article/116/4/1343/1903229|journal=The Quarterly Journal of Economics|language=en|volume=116|issue=4|pages=1343–1372|doi=10.1162/003355301753265598|s2cid=39187118|issn=0033-5533}}</ref>

Specifically, even when the government is the key investor, ownership by an NGO is optimal if and only if the NGO has a larger valuation of the project than the government. However, the general validity of this argument has been questioned by follow-up research. In particular, ownership by the party with the larger valuation need not be optimal when the public good is partially excludable,<ref>{{Cite journal|last1=Francesconi|first1=Marco|last2=Muthoo|first2=Abhinay|date=2011|title=Control Rights in Complex Partnerships|url=https://academic.oup.com/jeea/article/9/3/551/2298423|journal=Journal of the European Economic Association|language=en|volume=9|issue=3|pages=551–589|doi=10.1111/j.1542-4774.2011.01017.x|issn=1542-4766}}</ref> when both NGO and government may be indispensable,<ref>{{Cite journal|last=Halonen-Akatwijuka|first=Maija|date=2012|title=Nature of human capital, technology and ownership of public goods|url=http://www.sciencedirect.com/science/article/pii/S0047272712000862|journal=Journal of Public Economics|series=Fiscal Federalism|language=en|volume=96|issue=11|pages=939–945|doi=10.1016/j.jpubeco.2012.07.005|s2cid=154075467 |issn=0047-2727|hdl=1983/9197910f-4a3f-4ff3-8d8a-20a204ec2dda|hdl-access=free}}</ref> or when the NGO and the government have different bargaining powers.<ref>{{Cite journal|last=Schmitz|first=Patrick W.|date=2013|title=Incomplete contracts and optimal ownership of public goods|url=http://www.sciencedirect.com/science/article/pii/S016517651200540X|journal=Economics Letters|language=en|volume=118|issue=1|pages=94–96|doi=10.1016/j.econlet.2012.09.033|s2cid=53520873|issn=0165-1765}}</ref> Moreover, the investment technology can matter for the optimal ownership structure when there are bargaining frictions,<ref>{{Cite journal|last=Schmitz|first=Patrick W.|date=2015|title=Government versus private ownership of public goods: The role of bargaining frictions|journal=Journal of Public Economics|language=en|volume=132|pages=23–31|doi=10.1016/j.jpubeco.2015.09.009|s2cid=155401327|issn=0047-2727|doi-access=free}}</ref> when the parties interact repeatedly<ref>{{Cite journal|last1=Halonen-Akatwijuka|first1=Maija|last2=Pafilis|first2=Evagelos|date=2020|title=Common ownership of public goods|url=https://www.sciencedirect.com/science/article/abs/pii/S016726812030370X|journal=Journal of Economic Behavior & Organization|language=en|volume=180|pages=555–578|doi=10.1016/j.jebo.2020.10.002|s2cid=169842255|issn=0167-2681|hdl=1983/d4ab15e6-27ed-40ce-ae87-62d296e07181|hdl-access=free}}</ref> or when the parties are asymmetrically informed.<ref>{{Cite journal|last=Schmitz|first=Patrick W.|date=2021|title=Optimal ownership of public goods under asymmetric information|url=https://www.sciencedirect.com/science/article/abs/pii/S0047272721000608|journal=Journal of Public Economics|language=en|volume=198|pages=104424|doi=10.1016/j.jpubeco.2021.104424|s2cid=236397476|issn=0047-2727}}</ref><ref>{{Cite journal |last=Schmitz |first=Patrick W. |date=2024 |title=When should the government own the physical assets needed to provide public goods? |url=https://linkinghub.elsevier.com/retrieve/pii/S0165176524003148 |journal=Economics Letters |language=en |volume=241 |pages=111830 |doi=10.1016/j.econlet.2024.111830}}</ref>