Working Paper Series, Department of Economics, Copenhagen Business School
No 11-1999:
POLITICAL OWNERSHIP
Morten Bennedsen
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 distorts resource allocation in a
state owned enterprise. Then I show that efficiency in labor allocation is
improved when cash flow is rights affects efficiency in resource allocation
when there are restrictions on side payments between the interest
groups.
Keywords: Ownership Structure; Influence Externality; Side Payments; resource Allocation; (follow links to similar papers)
JEL-Codes: D21; D23; D78; H11; L33; (follow links to similar papers)
32 pages, July 18, 1999
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