Unions, government's preference, and privatization

Kangsik Choi

Economic Modelling, 2011, vol. 28, issue 6, 2502-2508

Abstract: By introducing the government's preference for tax revenues into the theoretical framework of unionized mixed oligopolies, this study investigates the efficiency of privatization. The results are twofold. First, regardless of the government's preference for tax revenues and the number of private firms, the government and the public firm do not always have an incentive to privatize the public firm even if the government places lesser emphasis on the tax revenues than on social welfare. Second, social welfare increases with an increased number of private firms regardless of the government's preference for tax revenues and decreases with the government's preference for tax revenues regardless of the number of private firms. Hence, the government can use tax more efficiently as a commitment device to control the union's wage demand so as to maintain lower wage level under unionized mixed oligopoly.

Keywords: Union; Government's preference; Social welfare; Tax; Privatization (search for similar items in EconPapers)
JEL-codes: C79 D43 H44 J51 L13 L33 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:28:y:2011:i:6:p:2502-2508

DOI: 10.1016/j.econmod.2011.06.025

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