Privatization in a Small Open Economy with Imperfect Competition
AbstractWe look at privatization in a general equilibrium model of a small, tariff-distorted, open economy. There is a differentiated good produced by both private and public sector enterprises. A reduction in government production in order to cut losses from such production raises the returns to capital and increases the tariff revenue, which are welfare improving. However, privatization also leads to lower wages and possibly fewer private brands. This lowers workersâ welfare, which may make privatization politically infeasible. Privatization can improve workersâ welfare with complementary reforms, e.g., attracting foreign investment or trade liberalization.
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Bibliographic InfoArticle provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.
Volume (Year): 14 (2012)
Issue (Month): 3 (06)
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Other versions of this item:
- Arghya Ghosh & Partha Sen, 2008. "Privatization in a Small Open Economy with Imperfect Competition," Discussion Papers 2008-21, School of Economics, The University of New South Wales.
- Partha Sen & Arghya Ghosh, 2010. "Privatization In A Small Open Economy With Imperfect Competition," Working papers 195, Centre for Development Economics, Delhi School of Economics.
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
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