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Property Rights and Market : Employee Privatization as a Cooperative Bargaining Process

Author

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  • MARINI, Marco

    (CORE, Universite catholique de Louvain, London School of Economics and Political Science and University of Urbino)

Abstract

The paper presents a game-theoretic model to investigate to what extent an employee privatization program of a State owned firm can be feasible under certain assumptions concerning the players' objective functions and the market structure in which the firm operates. The public managers are assumed interested in the firm's value, while the workers aim at maximizing the per capita surplus over the wage. The privatization process is then described as a bargaining process between the government in the role of core investor in the firm's physical assets and the workers of the firm, whose only asset is their personal skill. In the model the market structure in which the firm sells its product is assumed to he imperfectly competitive. After presenting the case of a monopolistic firm, the paper explores what happens if the firm plays a duopoly quantity game. The final section is devoted to introducing to the analysis an x-efficiency cost proportional to the public share of the ownership.

Suggested Citation

  • MARINI, Marco, 1996. "Property Rights and Market : Employee Privatization as a Cooperative Bargaining Process," LIDAM Discussion Papers CORE 1996023, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:1996023
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    Keywords

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    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining

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