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Leviathan resists: the endogenous relationship between privatization and firm performance

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  • K. Arin

    ()

  • Mehmet Ulubaşoğlu

    ()

Abstract

Using a unique panel data set of privatised cement firms in Turkey, we test the hypothesis that privatisation and firm performance are determined simultaneously in a political economy context. By focusing on the short- and medium-run joint relationship between privatisation and firm performance, we find that: i) private sector increases the output in the medium-run, but by changing the scale property of production from increasing returns-to-scale to decreasing returnsto- scale, ii) the only factor that increases the labour productivity in the short run is a decrease in labour stock, iii) the negative impact of labour growth on productivity is less severe during the privatised period, and iv) the likelihood of the privatisation of firms decreases if the number of workers employed in firms is high, if they exhibit favourable short-run performance, if the voter preference is less fractionalised and the government representation is weak in the provinces that they are located, and if they are based in socio-economically less developed regions.

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File URL: http://hdl.handle.net/10.1007/s11127-009-9418-y
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Bibliographic Info

Article provided by Springer in its journal Public Choice.

Volume (Year): 140 (2009)
Issue (Month): 1 (July)
Pages: 185-204

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Handle: RePEc:kap:pubcho:v:140:y:2009:i:1:p:185-204

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Web page: http://www.springerlink.com/link.asp?id=100332

Related research

Keywords: Privatization; Firm performance; Simultaneous equations; O38; L32; L33;

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Cited by:
  1. Filippo Belloc & Antonio Nicita, 2011. "Liberalization-Privatization Paths: Policies and Politics," Department of Economics University of Siena 609, Department of Economics, University of Siena.
  2. Christian Bjørnskov & Niklas Potrafke, 2009. "Political ideology and economic freedom across Canadian provinces," Working Papers CEB 09-054.RS, ULB -- Universite Libre de Bruxelles.
  3. Potrafke, Niklas, 2010. "Labor market deregulation and globalization: Empirical evidence from OECD countries," Munich Reprints in Economics 19282, University of Munich, Department of Economics.
  4. Filippo Belloc & Antonio Nicita, 2011. "The political determinants of liberalization: do ideological cleavages still matter?," International Review of Economics, Springer, vol. 58(2), pages 121-145, June.
  5. FILIPPO BELLOC and ANTONIO NICITA, 2010. "Partisan Liberalizations. A New Puzzle from OECD Network Industries?," RSCAS Working Papers 2010/28, European University Institute.

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