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Privatization and Changes in Corruption Patterns: The Roots of Public Discontent

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  • David Martimort
  • Stephane Straub

    ()

Abstract

This paper offers a theory of how the degree of corruption that prevails in a society responds to changes in the ownership structure of major public service providers. We show that there are cases in which privatization, even though it fosters investments in infrastructure, also opens the door to more corruption. The public dissatisfaction towards privatization is then crucially affected by the changes in the degree and pattern of corruption. Our model thus helps understand the seemingly paradoxical situation prevailing in Latin America, where most studies find that privatizations have been efficiency-enhancing and have fostered investments and, at the same time, popular dissatisfaction with the process is extremely high, especially among the middle class. We show that this line of explanation is supported by evidence from surveys in the region.

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Bibliographic Info

Paper provided by Edinburgh School of Economics, University of Edinburgh in its series ESE Discussion Papers with number 147.

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Length: 39
Date of creation: Dec 2006
Date of revision:
Handle: RePEc:edn:esedps:147

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References

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Citations

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Cited by:
  1. Straub, Stéphane, 2009. "Governance in Water Supply," IDEI Working Papers 544, Institut d'Économie Industrielle (IDEI), Toulouse.
  2. Elisabetta Iossa & David Martimort, 2008. "The Simple Micro-Economics of Public-Private Partnerships," The Centre for Market and Public Organisation 08/199, Department of Economics, University of Bristol, UK.
  3. Berg, Sanford V & Jiang, Liangliang & Lin, Chen, 2011. "Regulation and corporate corruption: new evidence from the telecom sector," MPRA Paper 32947, University Library of Munich, Germany.
  4. Stephane Straub, 2008. "Infrastructure and Growth in Developing Countries: Recent Advances and Research Challenges," ESE Discussion Papers 179, Edinburgh School of Economics, University of Edinburgh.
  5. Guasch, J. Luis & Straub, Stphane, 2009. "Corruption and concession renegotiations.: Evidence from the water and transport sectors in Latin America," Utilities Policy, Elsevier, Elsevier, vol. 17(2), pages 185-190, June.
  6. Kaminski, Jonathan, 2008. "Wealth, Living Standards and Perceptions in a Cotton Economy: Evidence from the Cotton Reform in Burkina Faso," Discussion Papers, Hebrew University of Jerusalem, Department of Agricultural Economics and Management 45780, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
  7. Vásquez, William F., 2011. "Household preferences and governance of water services: A hedonic analysis from rural Guatemala," IFPRI discussion papers 1152, International Food Policy Research Institute (IFPRI).
  8. Auriol, Emmanuelle & Blanc, Aymeric, 2008. "Capture and Corruption in Public Utilities: the Cases of Water and Electricity in Sub-Saharan Africa," IDEI Working Papers 505, Institut d'Économie Industrielle (IDEI), Toulouse.
  9. Athias, Laure & Saussier, Stéphane, 2007. "Contractual flexibility or rigidity for public private partnerships? Theory and evidence from infrastructure concession contracts," MPRA Paper 10541, University Library of Munich, Germany.
  10. Antonio Estache & L. Wren-Lewis, 2008. "Towards a Theory of Regulation for Developing Countries: Following Laffont's Lead," Working Papers ECARES, ULB -- Universite Libre de Bruxelles 2008_018, ULB -- Universite Libre de Bruxelles.
  11. Athias, Laure & Nunez, Antonio, 2008. "The more the merrier? Number of bidders, information dispersion, renegotiation and winner’s curse in toll road concessions," MPRA Paper 10539, University Library of Munich, Germany.
  12. Claude Ménard, 2013. "Is Public-Private Partnership Obsolete? Assessing the Obstacles and Shortcomings of PPP," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00653090, HAL.

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