Generally, privatization of state-owned enterprises is believed to enhance economic efficiency and competitiveness and to improve the overall economic performance of a country. So, can there be too much privatization? We show that this depends on the political objectives that are pursued with a...

This paper investigates the impact of emigration on the political choice regarding the size of the welfare state. Mobility has two countervailing effects: the political participation effect and the tax base effect. With emigration, the composition of the constituency changes. This increases the...

In transition and developing countries, we observe rather high levels of corruption even if they have democratic political systems. This is surprising from a political economy perspective, as the majority of people generally suffers from high corruption levels. Our model is based on the fact...

In many developing and transition countries, we observe rather high levels of corruption. This is surprising from a political economy perspective, as the majority of people in a corrupt country suffer from high corruption levels. Our model is based on the fact that corrupt officials have to pay...

The reluctant reaction of western governments to the AIDS crisis in developing countries is only one example for policy areas where we observe (s)low government action in spite of a public urge for intervention. The reason lies in the structure of political decision-making processes: The choice...

The separation of the legislative, executive, and judiciary powers is a key principle in most democratic constitutions. We analyze the costs and benefits of separating legislature and executive in an incomplete contracts model: the executive can decide to implement public projects. Under...