Privatization, Free Riding, and Industry-Expanding Lobbying

9 Pages Posted: 13 Mar 2007 Last revised: 4 Oct 2013

Date Written: March 2010

Abstract

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.

Keywords: privatization, political advocacy, lobbying, public sector, unions, collusion

JEL Classification: D21, D43, H11, H41, J45, J51, K23, L11, L13, L21, L32,L 33

Suggested Citation

Volokh, Alexander (Sasha), Privatization, Free Riding, and Industry-Expanding Lobbying (March 2010). 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, Available at SSRN: https://ssrn.com/abstract=969789 or http://dx.doi.org/10.2139/ssrn.969789

Alexander (Sasha) Volokh (Contact Author)

Emory University School of Law ( email )

1301 Clifton Road
Atlanta, GA 30322
United States
404-712-5225 (Phone)
404-727-6820 (Fax)

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