IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper

Privileges for Enterprises: Efficient Discrimination or Room for Abuse?

  • Tonis Alexander

    ()

Registered author(s):

    Although many enterprises in Russia have been privatized, the government still retains its influence over them; they, in turn, also try to attain state guardianship. State patronage over firms often takes the form of privileges (e.g., subsidies, tax discounts or government projects) given to firms in exchange for some “payment” (not necessarily in the monetary form). The purpose of this paper is, firstly, to reveal the incentives of both parties to set up and accept patronage and, secondly, to evaluate the economic consequences of such relations. If the government is non-benevolent, it uses privileges inefficiently. The proposed theoretical model detects the following sources of inefficiency: public goods are underprovided; the absolute level of privileges is too high; the discrimination suppressing inefficient firms may be too severe; and, finally, a self-interested government is likely to support large “old” enterprises with weak incentives to invest, which may negatively affect future economic growth.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: https://eercnetwork.com/default/download/creater/working_papers/file/a93a0f1471a6154bb1b340b00511f2ae3ce7b1ba.pdf
    Download Restriction: no

    Paper provided by EERC Research Network, Russia and CIS in its series EERC Working Paper Series with number 02-01e.

    as
    in new window

    Length: 43 pages
    Date of creation: 19 Aug 2002
    Date of revision:
    Handle: RePEc:eer:wpalle:02-01e
    Contact details of provider: Postal:
    EERC Research Network, Russia and CIS, 92/94, Dmytrivska Str., suite 404, Kyiv, 01135 Ukraine

    Phone: +38(044)492-8012
    Fax: +1(202)478-1968
    Web page: http://www.eercnetwork.com

    Order Information: Postal: EERC Research Network, Russia and CIS, 92/94, Dmytrivska Str., suite 404, Kyiv, 01135 Ukraine
    Web: https://eercnetwork.com/paper Email:


    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. Andrei Shleifer & Robert W. Vishny, 1994. "The Politics of Market Socialism," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 165-176, Spring.
    2. Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 162, Princeton, Woodrow Wilson School - Public and International Affairs.
    3. Yingyi Qian & Gerard Roland, . "Federalism and the Soft Budget Constraint," Working Papers 97045, Stanford University, Department of Economics.
    4. Leonardo Felli & Antonio Merlo, 2003. "Endogenous Lobbying," STICERD - Theoretical Economics Paper Series 448, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    5. Martin C. McGuire & Mancur Olson Jr., 1996. "The Economics of Autocracy and Majority Rule: The Invisible Hand and the Use of Force," Journal of Economic Literature, American Economic Association, vol. 34(1), pages 72-96, March.
    6. Andrei Shleifer & Robert W. Vishny, 1994. "Politicians and Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 995-1025.
    7. Michael Keen, 1997. "Vertical Tax Externalities in the Theory of Fiscal Federalism," IMF Working Papers 97/173, International Monetary Fund.
    8. Dixit, Avinash, 1980. "The Role of Investment in Entry-Deterrence," Economic Journal, Royal Economic Society, vol. 90(357), pages 95-106, March.
    9. Berkowitz, Daniel & Li, Wei, 2000. "Tax rights in transition economies: a tragedy of the commons?," Journal of Public Economics, Elsevier, vol. 76(3), pages 369-397, June.
    10. Hart, O. & Tirole, J., 1990. "Vertical Integration And Market Foreclosure," Working papers 548, Massachusetts Institute of Technology (MIT), Department of Economics.
    11. B. Douglas Bernheim & Michael D. Whinston, 1986. "Menu Auctions, Resource Allocation, and Economic Influence," The Quarterly Journal of Economics, Oxford University Press, vol. 101(1), pages 1-31.
    12. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:eer:wpalle:02-01e. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anton Pashchenko)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.