Government firms and authorities often sell services in the free market via affiliated consulting firms (CFs). In this study, I analyze whether these agents have an unfair competitive edge compared to private CFs. The theoretical analysis shows that private and state-owned CFs operate under different conditions. A private CF must choose between having permanent employees and pay full-time wages with the risk of over- and under-capacity or hiring professionals temporarily in the free market, which gives flexibility but may cause problems in hiring qualified professionals.
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Length: 14 pages Date of creation: 2001 Date of revision: Handle: RePEc:fth:iniesr:561
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Find related papers by JEL classification: H4 - Public Economics - - Publicly Provided Goods L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise L8 - Industrial Organization - - Industry Studies: Services
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