EconPapers    
Economics at your fingertips  
 

When will privatization maximize the government's net revenues?

Leon Taylor ()

MPRA Paper from University Library of Munich, Germany

Abstract: Governments often sell assets for revenues or economic efficiency. When the capital is durable, potential buyers may wait for the government to cut its price, since they know that as a monopoly it will initially price above marginal cost. Rather than sell, the government could continue to lease the capital to the public – that is, to sell the services that the capital generates, in exchange for a tax payment. Comparative statics indicate that a government maximizing its net revenues may prefer leasing to selling for a large inventory of capital-intensive products that buyers view as vital. For example, a socialist government contemplating a transition to markets must consider the impact on its own revenues. If its major assets are capital-intensive, the impact may be negative.

Keywords: Durable-goods monopoly; privatization; leasing versus selling; government revenues; transition economy (search for similar items in EconPapers)
JEL-codes: H27 (search for similar items in EconPapers)
Date: 2016-02-15
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/69589/1/MPRA_paper_69589.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:69589

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().

 
Page updated 2022-06-23
Handle: RePEc:pra:mprapa:69589