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The political economy of mass privatisation and imperfect taxation: Winners and loosers

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  • Rudiger Ahrend
  • Carlos Winograd

Abstract

This article investigates the connection between the apparently uncorrelated issues of tax evasion and privatisation in a political economy framework. We first consider how the political process – given a country's level of development and income distribution – will affect the efficiency of the tax system. We then discuss the impact of the efficiency of the taxation system on the outcomes of privatisation. We consider under which condition privatisation will proceed, and who will be the political supporters as well as the main winners of the privatisation process. Moreover, we investigate the impact of different forms of corruption both on the initial public support for privatisation, as well as on its long term political sustainability. Copyright Springer Science + Business Media, Inc. 2006

Suggested Citation

  • Rudiger Ahrend & Carlos Winograd, 2006. "The political economy of mass privatisation and imperfect taxation: Winners and loosers," Public Choice, Springer, vol. 126(1), pages 201-224, January.
    • Handle: RePEc:kap:pubcho:v:126:y:2006:i:1:p:201-224
    DOI: 10.1007/s11127-006-6499-8
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    1. Fuest, Clemens & Huber, Bernd, 2001. "Why is there so little tax coordination? The role of majority voting and international tax evasion," Regional Science and Urban Economics, Elsevier, vol. 31(2-3), pages 299-317, April.
    2. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," The World Bank Economic Review, World Bank, vol. 10(3), pages 565-591, September.
    3. Schmidt, Klaus M., 2000. "The political economy of mass privatization and the risk of expropriation," European Economic Review, Elsevier, vol. 44(2), pages 393-421, February.
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    6. Timothy Besley & Stephen Coate, 1997. "An Economic Model of Representative Democracy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(1), pages 85-114.
    7. Roland, Gerard & Verdier, Thierry, 1994. "Privatization in Eastern Europe : Irreversibility and critical mass effects," Journal of Public Economics, Elsevier, vol. 54(2), pages 161-183, June.
    8. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," The World Bank Economic Review, World Bank, vol. 10(3), pages 565-591, September.
    9. Oliver Hart & Andrei Shleifer & Robert W. Vishny, 1997. "The Proper Scope of Government: Theory and an Application to Prisons," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1127-1161.
    10. Anders Åslund & Peter Boone & Simon Johnson, 1996. "How to Stabilize: Lessons from Post-communist Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(1), pages 217-314.
    11. Roland, Gerard, 1994. "On the Speed and Sequencing of Privatisation and Restructuring," Economic Journal, Royal Economic Society, vol. 104(426), pages 1158-1168, September.
    12. Bruno Biais & Enrico Perotti, 2002. "Machiavellian Privatization," American Economic Review, American Economic Association, vol. 92(1), pages 240-258, March.
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    Cited by:

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    2. Christian Traxler, 2009. "Voting over taxes: the case of tax evasion," Public Choice, Springer, vol. 140(1), pages 43-58, July.
    3. Elert, Niklas & Halvardsson, Daniel, 2012. "Economic Freedom and Institutional Convergence," Ratio Working Papers 200, The Ratio Institute.

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    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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