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Public Versus Private Ownership under Costly Taxation

Author

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  • Morten Bennedsen

    (Institute of Economics, University of Copenhagen)

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.

Suggested Citation

  • Morten Bennedsen, 1998. "Public Versus Private Ownership under Costly Taxation," CIE Discussion Papers 1998-16, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
  • Handle: RePEc:kud:kuieci:1998-16
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    References listed on IDEAS

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    More about this item

    Keywords

    ownership structure; medium voter; externalities;

    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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