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When do privatizations have popular support? A voting model

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  • Rim Lahmandi-Ayed

    (UR MASE - Modélisation et Analyse Statistique et Economique - ESSAIT - Ecole Supérieure de la Statistique et de l'Analyse de l'Information - UCAR - Université de Carthage (Tunisie) = University of Carthage)

  • Didier Laussel

    (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

Abstract

We consider a general equilibrium model with vertical preferences, where workers and consumers are differentiated respectively by their sensitivity to effort and their intensity of preference for quality. We consider a public monopoly, i.e. which is owned equally by all individuals. The question is under which conditions the firm will be privatized and at which rate/price. The decisions are taken through majority vote in a plurality system. When the firm is controlled by the State, the price is determined through a vote among all the population. Otherwise, the price is the one which maximizes the profit. We prove that, when the maximum disutility of working in the firm is higher than the maximum utility of consuming its output, privatization may emerge as a possible choice of the majority, even if no hypothesis is made on the efficiency of a private management relative to a public one.

Suggested Citation

  • Rim Lahmandi-Ayed & Didier Laussel, 2022. "When do privatizations have popular support? A voting model," Post-Print hal-03702671, HAL.
    • Handle: RePEc:hal:journl:hal-03702671
    DOI: 10.1016/j.jmateco.2021.102633
    Note: View the original document on HAL open archive server: https://amu.hal.science/hal-03702671v1
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    Cited by:

    1. Hend Ghazzai & Wided Hemissi & Rim Lahmandi‐Ayed & Sana Mami Kefi, 2023. "More competition to alleviate poverty? A general equilibrium model and an empirical study," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 25(5), pages 985-1011, October.
    2. Rihab Bellakhal & Hend Ghazzai & Rim Lahmandi‐Ayed, 2024. "Globalisation and informality: The role of quality gap and social contributions," The World Economy, Wiley Blackwell, vol. 47(7), pages 3120-3149, July.
    3. Rabah Amir & Hend Ghazzai & Rim Lahmandi-Ayed, 2023. "On the political economy of economic integration," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 61(1), pages 61-100, July.

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