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Lange and Hayek Revisited: Lessons from Czech Voucher Privatization

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  • Jan Hanousek
  • Randall K. Filer

Abstract

A fundamental question in economics since the 1930s has been whether an administrative price system could simulate the results of perfect competition even without a true market for the means of production. The theoretical possibility of such a system has been known since the introduction of market socialism by Oskar Lange. We have used the artificial bidding market involved in the Czech voucher privatization process to test whether a sequential process of trial-and-error can set administrative prices close to equilibrium. It would appear from this natural experiment that Robbins and Hayek were correct in doubting the real-world feasibility of market socialism.

Suggested Citation

  • Jan Hanousek & Randall K. Filer, 2000. "Lange and Hayek Revisited: Lessons from Czech Voucher Privatization," CERGE-EI Working Papers wp166, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    • Handle: RePEc:cer:papers:wp166
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    References listed on IDEAS

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    1. Egon Neuberger, 1973. "The Plan and the Market: The Models of Oskar Lange," The American Economist, Sage Publications, vol. 17(2), pages 148-153, October.
    2. Jan Hanousek & Eugene Kroch, 1998. "The two waves of voucher privatization in the Czech Republic: a model of learning in sequential bidding," Applied Economics, Taylor & Francis Journals, vol. 30(1), pages 133-143.
    3. Hingorani, Archana & Lehn, Kenneth & Makhija, Anil K., 1997. "Investor behavior in mass privatization: The case of the Czech voucher scheme," Journal of Financial Economics, Elsevier, vol. 44(3), pages 349-396, June.
    4. Jan Svejnar & Miroslav Singer, 1994. "Using vouchers to privatize an economy: the Czech and Slovak case," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 2(1), pages 43-69, March.
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    Keywords

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    JEL classification:

    • P00 - Political Economy and Comparative Economic Systems - - General - - - General
    • P22 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Prices

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