Abstract
Political involvement in the operation of an enterprise, whether it is private or state owned, creates opportunities for interest groups to influence the allocation of resources. Resource allocation transfers rent both between unions and private owners within the firm and between these organized insiders and the disorganized taxpayers. I investigate how insiders' lobby activities distort resource allocation in a state owned enterprise. Then I show that efficiency in labour allocation is improved when cash flow is transferred to private owners. Finally, I analyze how transferring control rights affects efficiency in resource allocation when there are restrictions on side payments between the interest groups.
| Original language | English |
|---|---|
| Journal | Journal of Public Economics |
| Volume | 76 |
| Issue number | 3 |
| Pages (from-to) | 559-581 |
| Number of pages | 23 |
| ISSN | 0047-2727 |
| DOIs | |
| Publication status | Published - 1 Jan 2000 |
| Externally published | Yes |
Keywords
- D21
- D23
- D78
- H11
- Influence externality
- L33
- Ownership structure
- Resource allocation
- Side payments