Privatization and X-Inefficiency: A Bargaining Approach

Jonathan Haskel () and Amparo Sanchis-Llopis

No 1192, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The usual analysis of privatization and X-inefficiency uses agency theory to model managerial effort. We model worker effort as determined by a bargain between firms and workers. Workers dislike effort because it lowers utility. Firms prefer high effort because it raises productivity. Public-sector firms are assumed to be social welfare maximizers and compared to private-sector firms, therefore, they bargain lower effort levels since they have the interests of consumers and workers at heart. Our model predicts that under certain conditions privatization should raise effort and so lower X-inefficiency, and that wages may increase or decrease.

Keywords: Bargaining; Privatization; X-inefficiency (search for similar items in EconPapers)
JEL-codes: J50 L33 (search for similar items in EconPapers)
Date: 1995-06
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Citations: View citations in EconPapers (30)

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Related works:
Journal Article: Privatisation and X-Inefficiency: A Bargaining Approach (1995)
Working Paper: Privatisation and X-inefficiency: A Bargaining Approach (1993)
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