Privatization, investment, and ownership efficiency
AbstractWe provide a model that explains the following empirical observations: (i) private ownership is more efficient than public ownership, (ii) privatizations are associated with increases in efficiency, and (iii) the increase in efficiency predates the privatization. The two key mechanisms explaining the results are: (i) a government owner keeping control can affect long-run employment levels when investing and (ii) a privatizing government has a stronger incentive to invest than an acquiring firm: the government exploits the fact that investments increase the sales price not only due to the increase in the acquirer's profit, but also due to a reduced profit for the non-acquirer. Copyright 2012 Oxford University Press 2011 All rights reserved, Oxford University Press.
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Bibliographic InfoArticle provided by Oxford University Press in its journal Oxford Economic Papers.
Volume (Year): 64 (2012)
Issue (Month): 4 (October)
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Other versions of this item:
- Friberg, Richard & Norbäck, Pehr-Johan & Persson, Lars, 2008. "Privatization, Investment and Ownership Efficiency," Working Paper Series 744, Research Institute of Industrial Economics.
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
- L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
- P31 - Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions
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