International Advances in Economic Research

, Volume 5, Issue 4, pp 418–429 | Cite as

The challenge of the commons: Estonian housing privatization

  • Charles E. Scott
  • Frederick W. Derrick
  • Ene Kolbre


Housing privatization directly affects each individual and raises significant questions beyond those raised in business privatization. When businesses are privatized, the responsibilities are transferred with the ownership. Housing privatization transfers the ownership of and responsibility for the benefits and costs for the internal space of a flat. However, ownership of and responsibility for the common areas and systems in the large buildings-hallways, roofs, heating, lighting, or exterior walls-are not transferred. These buildings provide a classic scenario for the tragedy of the commons. Who gets the benefits and who pays the costs? How is the externality internalized and responsibility transferred? This paper evaluates the housing privatization process in Estonia with emphasis on the problems of maintenance and the formation of dwelling owners associations. Recommendations for resolution of the tragedy of the commons are provided.


Economic Growth International Economic Internal Space Common Area Business Privatization 
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Copyright information

© International Atlantic Economic Society 1999

Authors and Affiliations

  • Charles E. Scott
    • 1
  • Frederick W. Derrick
    • 1
  • Ene Kolbre
    • 2
  1. 1.Loyola CollegeUSA
  2. 2.Tallinn Technical UniversityEstonia

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