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 takes into account the negative effect on employment of investment 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.
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Bibliographic InfoPaper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 744.
Length: 25 pages
Date of creation: 10 Apr 2008
Date of revision:
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Privatization; Asset Ownership; Restructuring; Oligopoly;
Other versions of this item:
- Pehr-Johan Norbäck & Lars Persson, 2012. "Privatization, investment, and ownership efficiency," Oxford Economic Papers, Oxford University Press, vol. 64(4), pages 765-786, October.
- 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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