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Corruption and positive selection in privatization

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  • Buia, Raluca E.
  • Molinari, M. Cristina

Abstract

We 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 Info

Article provided by Elsevier in its journal Research in Economics.

Volume (Year): 66 (2012)
Issue (Month): 4 ()
Pages: 297-304

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Handle: RePEc:eee:reecon:v:66:y:2012:i:4:p:297-304

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Web page: http://www.elsevier.com/locate/inca/622941

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Keywords: Corruption; Privatization; Private versus public provision;

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References

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Cited by:
  1. Maria Cristina Molinari, 2011. "Corruption in Privatization and Governance Regimes," Working Papers 201_28, Department of Economics, University of Venice "Ca' Foscari".

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