IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

Privatization and Management Incentives in the Transition Period in Eastern Europe

  • Schmidt Klaus M.
  • Schnitzer Monika

The paper develops a simple theoretical framework in which the impact of different governance structures on management incentives, the efficiency of restructuring, and the social costs of the adjustment process in the transition period in Eastern Europe can be analyzed. The model shows that immediate privatization leads not only to strong management incentives to restructure but also to high social costs of bankruptcies and layoffs. If the government stays in control social costs will be lower. However, in this case managers face a soft budget constraint and have less incentive to restructure. The model also suggests which companies should be privatized first. J. Comp. Econom., June 1993, 17(2), pp 964-287. University of Bonn, D-531 13 Bonn, Germany.

(This abstract was borrowed from another version of this item.)

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal Journal of Comparative Economics.

Volume (Year): 17 (1993)
Issue (Month): 2 (June)
Pages: 264-287

in new window

Handle: RePEc:eee:jcecon:v:17:y:1993:i:2:p:264-287
Contact details of provider: Web page:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Schnitzer, M., 1992. "Breach of Trust in Takeovers and the Optimal Corporate Charter," Working papers 92-10, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Schaffer, Mark E., 1989. "The credible-commitment problem in the center-enterprise relationship," Journal of Comparative Economics, Elsevier, vol. 13(3), pages 359-382, September.
  3. Holmstrom, Bengt & Milgrom, Paul, 1987. "Aggregation and Linearity in the Provision of Intertemporal Incentives," Econometrica, Econometric Society, vol. 55(2), pages 303-28, March.
  4. Jean Tirole, 1991. "Privatization in Eastern Europe: Incentives and the Economics of Transition," NBER Chapters, in: NBER Macroeconomics Annual 1991, Volume 6, pages 221-268 National Bureau of Economic Research, Inc.
  5. Stanley Fischer, 1991. "Privatization in East European Transformation," NBER Working Papers 3703, National Bureau of Economic Research, Inc.
  6. David E. M. Sappington & Joseph E. Stiglitz, 1987. "Privatization, Information and Incentives," NBER Working Papers 2196, National Bureau of Economic Research, Inc.
  7. Sinn, Hans-Werner, 1992. "Privatization in East Germany," Public Finance = Finances publiques, , vol. 47(Supplemen), pages 152-71.
  8. Bengt Holmstrom, 1981. "Moral Hazard in Teams," Discussion Papers 471, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  9. Eduardo Borensztein & Manmohan S. Kumar, 1991. "Proposals for Privatization in Eastern Europe," IMF Staff Papers, Palgrave Macmillan, vol. 38(2), pages 300-326, June.
  10. Andrei Shleifer & Lawrence H. Summers, 1988. "Breach of Trust in Hostile Takeovers," NBER Chapters, in: Corporate Takeovers: Causes and Consequences, pages 33-68 National Bureau of Economic Research, Inc.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eee:jcecon:v:17:y:1993:i:2:p:264-287. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.