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Hideya Kato
''Privatization and government preference''
( 2008, Vol. 12 No.40 )
This paper uses a mixed oligopoly model to examine the relationship between the privatization of a public firm and government preferences for tax revenue. From a public choice viewpoint, we assume the government prefers tax revenue to the sum of consumer and producer surplus, whereas the public firm only cares about the sum of consumer and producer surplus. The results indicate that if the government sufficiently prefers tax revenue, it will not privatize the public firm.
Keywords: Mixed oligopoly Privatization Taxation Government preference
JEL: L3 - Nonprofit Organizations and Public Enterprise: General
H2 - Taxation, Subsidies, and Revenue: General
Manuscript Received : Nov 28 2008 Manuscript Accepted : Dec 17 2008

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