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Voting for Inefficiency

Author

Listed:
  • Nieswand, Maria
  • Baake, Pio
  • Wagner, Lilo

Abstract

In this paper, we propose a probabilistic voter model that rationalizes the ineff cient use of labor input in municipality-owned enterprises. Our focus is on the relationship between absolute as well as relative ineff ciency measures and the size of the municipality in which public rms operate. We show that larger communities maintain enterprises, which are on average more eff cient in absolute as well as relative terms and that e ffciency shows a lower variance for large enterprises. Using data from a sample of electricity distribution companies in Germany we find our theoretical predictions consistent with the companies' observed behavior.

Suggested Citation

  • Nieswand, Maria & Baake, Pio & Wagner, Lilo, 2015. "Voting for Inefficiency," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113068, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc15:113068
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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