The Benefits Of Privatization: Evidence From Mexico
Critics of privatization argue that the increased profitability of privatized companies comes at the expense of society. Using data from 97 percent of those nonfinancial firms privatized in Mexico during the period 1983-1991, we study two channels for social losses: (1) increased prices, and (2) layoffs and lower wages. Privatization is followed by a 24-percentage-point increase in the mean ratio of operating income to sales as firms catch up with industry-matched control groups. We estimate that higher product prices explain 5 percent of that increase; transfers from laid-off workers, 31 percent; and productivity gains, the remainder. © 2000 the President and Fellows of Harvard College and the Massachusetts Institute of Technology
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Volume (Year): 114 (1999)
Issue (Month): 4 (November)
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References listed on IDEAS
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- John Vickers & George Yarrow, 1988. "Privatization: An Economic Analysis," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262720116, June.
- Alfred E. Kahn, 1988. "The Economics of Regulation: Principles and Institutions," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262610523, June.
- Florencio Lopez-de-Silane, 1996.
"Determinants of Privatization Prices,"
NBER Working Papers
5494, National Bureau of Economic Research, Inc.
- Shleifer, Andrei & Vishny, Robert W, 1994. "Politicians and Firms," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 995-1025, November.
- Shapiro, C. & Willing, D.R., 1990. "Economic Rationales For The Scope Of Privatization," Papers 41, Princeton, Woodrow Wilson School - Discussion Paper.
- Megginson, William L & Nash, Robert C & van Randenborgh, Matthias, 1994. " The Financial and Operating Performance of Newly Privatized Firms: An International Empirical Analysis," Journal of Finance, American Finance Association, vol. 49(2), pages 403-52, June.
- Caves, Richard E., 1990. "Lessons from privatization in Britain : State enterprise behavior, public choice, and corporate governance," Journal of Economic Behavior & Organization, Elsevier, vol. 13(2), pages 145-169, March.
- George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
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