We consider the supply of a public good based on a publicly owned facility. The Government has a choice between provision in-house and privatizing the facility and then outsourcing the production. In particular, we focus on corruption in the decision to privatize and on its effect on social welfare when there is asymmetric information on the public and private manager’s efficiency. Our analysis shows that a corrupt Government, that chooses to privatize only in exchange for a bribe, makes a positive selection on the private firm’s efficiency and, thus, may have a positive effect on social welfare.

Corruption and positive selection in privatization

BUIA, Raluca Elena;MOLINARI, Maria Cristina
2012-01-01

Abstract

We consider the supply of a public good based on a publicly owned facility. The Government has a choice between provision in-house and privatizing the facility and then outsourcing the production. In particular, we focus on corruption in the decision to privatize and on its effect on social welfare when there is asymmetric information on the public and private manager’s efficiency. Our analysis shows that a corrupt Government, that chooses to privatize only in exchange for a bribe, makes a positive selection on the private firm’s efficiency and, thus, may have a positive effect on social welfare.
2012
66
File in questo prodotto:
File Dimensione Formato  
Buia-R.E._2012_Res.-Econ.pdf

accesso aperto

Tipologia: Documento in Post-print
Licenza: Accesso gratuito (solo visione)
Dimensione 210.71 kB
Formato Adobe PDF
210.71 kB Adobe PDF Visualizza/Apri

I documenti in ARCA sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10278/36524
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 5
  • ???jsp.display-item.citation.isi??? ND
social impact