Public Versus Private Ownership under Costly Taxation

Morten Bennedsen
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Morten Bennedsen: Institute of Economics, University of Copenhagen

No 1998-16, CIE Discussion Papers from University of Copenhagen. Department of Economics. Centre for Industrial Economics

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.

Keywords: ownership structure; medium voter; externalities (search for similar items in EconPapers)
JEL-codes: D21 H11 H40 L33 (search for similar items in EconPapers)
Pages: 19 pages
Date: 1998-09
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Persistent link: https://EconPapers.repec.org/RePEc:kud:kuieci:1998-16

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