We develop a theoretical model in which firms are either private or state-owned. When firms become insolvent, the … the bankruptcy of a firm entails social costs. In a stylized model, we analyze how government interventions affect … allocative and productive efficiency. Nationalization of private firms in case unprofitable investments were made, leads to …

Wage Dispersion and Efficiency. It is often assumed that markets generate efficient allocations, but these are not … compensating differentials will increase both efficiency and fairness, quite in line with the classical position taken by Adam …