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The long-run effects of privatization on productivity: Evidence from Canada

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  • Boardman, Anthony E.
  • Vining, Aidan R.
  • Weimer, David L.

Abstract

From a public policy perspective, the social value of privatization depends on the aggregate efficiency benefits over the long term. However, most privatization studies that examine the efficiency impacts of privatization employ relatively short time frames: usually 3-years before and 3-years after the privatization. In contrast, this study examines the long run effects (up to 24 years) of privatization on productivity based on an examination of major, mostly federal, share-issue privatizations in Canada. We control for factors that might affect productivity apart from privatization by including panels of Always-SOE firms and Always-Private firms, and estimating difference-in-difference models. The major finding is that the productivity of Privatized SOEs increases relative to SOEs at a decreasing rate, peaking at 14–16 years. Despite this improvement, the productivity of privatized firms continues to lag that of Always-Private firms. We consider some of the policy implications of these findings.

Suggested Citation

  • Boardman, Anthony E. & Vining, Aidan R. & Weimer, David L., 2016. "The long-run effects of privatization on productivity: Evidence from Canada," Journal of Policy Modeling, Elsevier, vol. 38(6), pages 1001-1017.
  • Handle: RePEc:eee:jpolmo:v:38:y:2016:i:6:p:1001-1017
    DOI: 10.1016/j.jpolmod.2016.04.002
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    Keywords

    State-owned enterprises; Privatization; Long run performance; Total factor productivity; Efficiency;
    All these keywords.

    JEL classification:

    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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