The Political Economy of Mass Privatization and the Risk of Expropriation
The privatization process in Eastern Europe is not irreversible. Future governments may want to expropriate successful private firms by increasing taxation or by renationalizing them in order to subsidize unsuccessful firms. The paper uses a simple median voter model to predict the policy of future governments. It is shown that there will be less expropriation the more shares are distributed free to the population. It is better to distribute shares equally across the population rather than to give them to insiders of each firm. Furthermore, people should be discouraged from selling their shares for cash. The threat of expropriation adversely affects investment and restructuring efforts. It is shown that a mass privatization scheme which includes substantial free distribution of shares may induce more investment, higher expected profits and higher privatization revenues for the government than a policy that relies exclusively on selling shares to the highest bidder.
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.
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.
|Date of creation:||Jan 1997|
|Contact details of provider:|| Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.|
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
|Order Information:|| Email: |
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.:
- Roland, Gerard & Verdier, Thierry, 1994.
"Privatization in Eastern Europe : Irreversibility and critical mass effects,"
Journal of Public Economics,
Elsevier, vol. 54(2), pages 161-183, June.
- Roland, G. & Verdier, T., 1991. "Privatization in Eastern Europe: Irreversibility and Critical Mass Effects," DELTA Working Papers 91-21, DELTA (Ecole normale supérieure).
- Roland, G. & Verdier, T., 1991. "Privatisation in Eastern Europe: Irreversibility and Critical Mass Effects," Papers 9105, Universite Libre de Bruxelles - C.E.M.E..
- Roland, Gérard & Verdier, Thierry, 1992. "Privatization in Eastern Europe: Irreversibility and Critical Mass Effects," CEPR Discussion Papers 612, C.E.P.R. Discussion Papers.
- Schmidt Klaus M. & Schnitzer Monika, 1993.
"Privatization and Management Incentives in the Transition Period in Eastern Europe,"
Journal of Comparative Economics,
Elsevier, vol. 17(2), pages 264-287, June.
- Schmidt, Klaus M. & Schnitzer, Monika, 1993. "Privatization and Management Incentives in the Transition Period in Eastern Europe," Munich Reprints in Economics 3109, University of Munich, Department of Economics.
- Schmidt, K.M. & Schnitzer, M., 1992. "Privatization and Management Incentives in the Transition Period in Eastern Europe," Working papers 92-17, Massachusetts Institute of Technology (MIT), Department of Economics.
- Schmidt,Klaus & Schnitzer,Monika, 1992. "Privatization and management incentives in the transition period in Eastern Europe," Discussion Paper Serie A 374, University of Bonn, Germany.
- Schmidt, Klaus M. & Schnitzer, Monika, 1993. "Privatization and Management Incentives in the Transition Period in Eastern Europe," Munich Reprints in Economics 3400, University of Munich, Department of Economics.
- 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.
When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:1542. 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: ()
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.