Chapter 9: Impure goods and the structure of contracts
We extend our analysis to impure goods that are generated from a public–private research partnership (PPRP). An impure good has attributes of both public and private goods; that is, the good is either non-rival or non-excludable, but not both. We present another set of control right allocations that depend on the degree of impurity and the financial investment of each partner. Much of the literature on impure goods is based on partnerships in countries attempting to improve management and service provisions of natural resources. We present several case studies on both infrastructure investment and renewable energy. We establish a framework for analyzing these contracts based on control rights that stem from contingencies in the partnership’s research and development process. Our framework aligns incentives to allow renewable energy PPRPs to achieve long-run success.
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