We analyze the incentives of a government to privatize a state owned firm. Assumingprice cap regulation, a unionized labor market and wage bargaining the government’sgains from privatization depend on two effects. While the government looses controlover the firm’s investment and employment decisions, the union’s bargaining positioncan be weakened by privatization. Since price cap regulation tends to increase the wage under privatization, the government’s incentives to privatize are low if the union’s bargaining power is high. Considering different kinds of in-vestments does not change this result qualitatively.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by Ifo Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number
Ifo Working Papers No. 18.
Find related papers by JEL classification: H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Boundaries of Public and Private Enterprise; Privatization; Contracting Out
Did you know? Each page is provided with a technical contact, in case something is not right with the supplied information. See under "publisher info".