Public Versus Private Ownership under Costly Taxation
AbstractThe importance of ownership structure is analyzed in a simple voting framework. The model contains a market failure arising from the market not internalizing the total surplus from trade and a political failure arising from the government catering to the interests of the median voter. In a publicly owned firm the government uses both taxes and the firm´s internal resources government does not control the firm´s internal resources so any non profit generating activities must be purely tax financed. Ownership matters since the gorvernment does not trigger the same resource allocation in a private firm through regulation as in a similar publicly owned firm.
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Bibliographic InfoPaper provided by University of Copenhagen. Department of Economics. Centre for Industrial Economics in its series CIE Discussion Papers with number 1998-16.
Length: 19 pages
Date of creation: Sep 1998
Date of revision:
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ownership structure; medium voter; externalities;
Find related papers by JEL classification:
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- H40 - Public Economics - - Publicly Provided Goods - - - General
- L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
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