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Public Versus Private Ownership under Costly Taxation

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  • Morten Bennedsen

    (Institute of Economics, University of Copenhagen)

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    Abstract

    The 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 Info

    Paper provided by University of Copenhagen. Department of Economics. Centre for Industrial Economics in its series CIE Discussion Papers with number 1998-16.

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    Length: 19 pages
    Date of creation: Sep 1998
    Date of revision:
    Handle: RePEc:kud:kuieci:1998-16

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    Keywords: ownership structure; medium voter; externalities;

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