Privatization, Free Riding, and Industry-Expanding Lobbying
Emory University School of Law
International Review of Law and Economics, Vol. 30, No. 1, 2010
Georgetown Law and Economics Research Paper No. 969789
Georgetown Public Law Research Paper No. 969789
Critics of privatization argue that privatization encourages providers to lobby for industry expansion. I argue that this is not generally true when public-sector actors also lobby.
Where the effectiveness of advocacy depends on total expenditures, some initial amount of privatization always decreases industry-expanding advocacy. The extent of privatization for which this no longer holds depends on the total benefits of provision to the public and private-sector actors, as well as the extent of collusion.
Under relaxed assumptions, the effect of privatization on industry-expanding advocacy is ambiguous. The charge that privatization will increase advocacy is unfounded without further empirical development.
Number of Pages in PDF File: 9
Keywords: privatization, political advocacy, lobbying, public sector, unions, collusion
JEL Classification: D21, D43, H11, H41, J45, J51, K23, L11, L13, L21, L32,L 33
Date posted: March 13, 2007 ; Last revised: October 4, 2013