Privatization Incentives – A Wage Bargaining Approach
AbstractWe 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.
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Bibliographic InfoPaper 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.
Date of creation: 2005
Date of revision:
Wage bargaining regulation privatization;
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; Public-Private Enterprises
- L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bernardo Bortolotti & Paolo Pinotti, 2003. "The Political Economy of Privatization," Working Papers, Fondazione Eni Enrico Mattei 2003.45, Fondazione Eni Enrico Mattei.
- Kira Boerner, 2004. "The Political Economy of Privatization: Why Do Governments Want Reforms?," Working Papers, Fondazione Eni Enrico Mattei 2004.106, Fondazione Eni Enrico Mattei.
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