Corruption and positive selection in privatization
AbstractWe consider the supply of a public good based on a publicly owned facility. The Government has a choice between provision in-house and privatizing the facility and then outsourcing the production. In particular, we focus on corruption in the decision to privatize and on its effect on social welfare when there is asymmetric information on the public and private manager's efficiency. Our analysis shows that a corrupt Government, that chooses to privatize only in exchange for a bribe, makes a positive selection on the private firm's efficiency and, thus, may have a positive effect on social welfare.
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Bibliographic InfoArticle provided by Elsevier in its journal Research in Economics.
Volume (Year): 66 (2012)
Issue (Month): 4 ()
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Web page: http://www.elsevier.com/locate/inca/622941
Corruption; Privatization; Private versus public provision;
Other versions of this item:
- Raluca E. Buia & M. Cristina Molinari, 2008. "Corruption and Positive Selection in Privatization," Working Papers 2008_43, Department of Economics, University of Venice "Ca' Foscari".
- D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
- H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
- L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
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