Ownership of the Means of Production∗

Private ownership creates monopoly power, harming the dynamic efficiency of asset allocation. Common ownership improves allocative efficiency, but eliminates incentives to invest in the common value of assets. We propose a simple partial private ownership system, Harberger licensing, for public assets. Lessors self-assess a price at which they commit to sell the asset to any interested buyer and pay a tax on this price. In a calibrated dynamic trade model, setting Harberger tax rates using a simple rule-of-thumb – half the observed turnover rate – increases steady state value by 4.6% of asset prices under full private ownership.