Suchergebnisse

Privatization is often explained by a desire to achieve efficiency. Some authors propose that the main reason for inferior performance under public ownership is interference from politicians who promote output & employment instead of profits to please voters. Western state-owned firms, however, typically operate in imperfectly competitive markets, or even in natural monopolies. Private ownership then leads to underprovision. This paper presents conditions under which political interference yields higher welfare than under commercial objectives, & vice versa. If effort affects utility, interference may be beneficial in a seemingly perfect market. 3 Appendixes, 102 References. Adapted from the source document.

AbstractWe analyse a market where quality is reflected in sunk costs and/or marginal costs. Firms provide too low quality as compared to the socially optimal solution whenever quality affects (at least) sunk costs. Entry would then increase welfare, but the number of firms is restricted by an upper limit that depends on how sunk costs and consumer utility are affected by a quality change. Firms may even produce an excessive output if both types of costs are dependent on quality. Moreover, entry reduces quality except for when the number of firms increases from two to three. Quality is on the other hand socially optimal and independent of market structure if only marginal costs are affected by quality, but output is too low unless the number of firms is very high.

ABSTRACT**: The most important economic motive for privatization and liberalization is to reduce costs, which are believed to be higher in a public monopoly for several reasons, including internal rent capture. We assume that there is wage‐bargaining both before and after privatization and liberalization. Wages are then in most cases reduced by liberalization but not by privatization as such. Social welfare may increase after liberalization with decentralized wage‐bargaining if many firms enter, if the employees' bargaining strength is high and if there is no need of vertical separation. However, the social costs of privatization and liberalization are more likely to dominate despite free entry if sunk costs are high, and will always dominate under central wage‐bargaining or vertical separation.

ABSTRACTWe ask how the scope for non‐profit objectives in a state‐owned enterprise (SOE) in a mixed oligopoly changes because of competition from firms in another country. There is no change if costs and demand are given, unless the trade partner is a low‐cost country. However, the scope for non‐profit objectives is limited by the country's relative size if wages are market‐clearing and if workers and firms are stationary, because of reduced competitiveness caused by higher real wage rates. The total surplus is then not affected by the actions of the SOE. International trade does not otherwise reduce the scope for its non‐profit objectives if workers and firms are mobile, but productivity differences might require restrictions in order to avoid a complete relocation of the workforce in either country.