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A theory of the optimal amount of public ownership of land

Published online by Cambridge University Press:  17 August 2016

Bertrand Crettez ,
Claire Loupias  and
Philippe Michel
Bertrand Crettez
Affiliation:
C.R.E.S.E., Université de Franche-Comté, et C.E.M.E, Université de Paris I
Claire Loupias
Affiliation:
Université de la Rochelle et C.E.B.I., Université de Paris I
Philippe Michel
Affiliation:
I.U.F, GREQAMUniversité de la Méditerranée II
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Summary

A major issue in reforming previously planned economies is the creation of assets markets. In this paper, it is argued that the mere characteristics of the assets to be privatized matter. Indeed, private ownership of land diverts resources from more productive activities. This suggests that for a given economy, there exists an optimal rate of public ownership of land. It is the purpose of this paper to provide a theory of such rate. We make use of a two-sectors overlapping generations model economy with land and capital. We find a version of the second welfare theorem: the command optimum can be decentralized using one and only one instrument, i.e. the rate of land publicly held. We call such a rate the optimal rate of public ownership of land.

Résumé

Résumé

Cet article envisage plus particulièrement le cas des terres. Les considérations précédentes suggèrent l'existence d'un montant optimal de propriété publique des terres. Nous proposons une théorie de ce taux pour une économie simplifiée. A cette fin, nous utilisons un modèles à générations imbriquées d'agents avec deux secteurs et trois facteurs de production (le capital, le travail et la terre). Nous démontrons une version du second théorème de l'économie du bien-être : l'optimum de premier rang peut —parfois— être décentralisé à l'aide d'un unique instrument : la proportion des terres détenues par la puissance publique. Nous appelons la proportion en question le montant optimal de propriété publique des terres.

Keywords

D90H82041Q15D90H82041Q15
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 63 , Issue 3 , 1997 , pp. 209 - 223
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1997 

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Footnotes

(*)

We would like to thank two anonymous referees for very helpful comments on a previous version of this paper. We are also grateful to J. Blot, and J.P. Vidal for stimulating discussions and remarks on the topic of this paper. Of course, we alone are responsible for any remaining shortcomings.

References

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