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On the dynamics of privatization


  • Heng-fu Zou

    (Public Economics Division, Policy Research Department, The World Bank
    Institute of Advanced Economic Studies, Wuhan University)


In this paper, we answer two questions about how privatization should proceed. First, we assume an exogenously given time span of privatization and study how the rate of privatization is related to the initial total state capital, the adjustment cost of privatization, the efficiency difference between the private sector and the state sector. the income discount rate and the exogenous terminal time fur privatization. Second, from the perspective of income maximization and adjustment cost minimization, we endogenize the choice of the time span of privatization and offer a solution to the optimal terminal time for the completion of the privatization process.

Suggested Citation

  • Heng-fu Zou, 1995. "On the dynamics of privatization," CEMA Working Papers 92, China Economics and Management Academy, Central University of Finance and Economics.
  • Handle: RePEc:cuf:wpaper:92

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    Cited by:

    1. Go, Delfin S., 1994. "Revenue uncertainty and the choice of tax instrument during the transition in Eastern Europe," Policy Research Working Paper Series 1330, The World Bank.

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    JEL classification:

    • P2 - Economic Systems - - Socialist Systems and Transition Economies


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