The paper analyzes governments' tradeoff between fiscal benefits and consumer surplus in privatization reforms of noncompetitive industries in developing countries. Under privatization, the control rights are transferred to private interests so that public subsidies decline. This benefit for...

The paper studies the impact of government budget constraint in a pure adverse selection problem of monopoly regulation. The government maximizes total surplus but incurs some cost of public funds. An alternative to regulation is proposed in which firms are free to enter the market and to choose...

In this paper, we study the impact of government's budget constraint on the optimal industrial policy in industries with increasing returns to scale. We show that privatization is preferred to regulation for intermediate values of the shadow cost of public funds (i.e., the Lagrange multiplier of...

The authors use a computable general equilibrium model to estimate the marginal cost of public funds (MCF) for taxes on domestic goods, exports, imports, capital, and labor in 38 African countries. The resulting MCF estimates provide directions for tax reform in Africa. The authors investigate...

This paper studies the effect of soft-budget constraints in a pure adverse selection model of monopoly regulation. We consider a government maximizing total surplus but incurring some cost of public funds à la Laffont Tirole (1993). We propose a regulatory set-up in which firms are free to...

We introduce, in a multiple agents moral hazard setting, a status variable which reflects an agent's claim to social recognition in her work. Status is a scarce resource so that increasing an agent's status requires that another agent's status is decreased. High status agents are more willing to...