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The Political Economy of Privatization

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  • Bernardo Bortolotti

    (University of Torino and Fondazione Eni Enrico Mattei)

  • Paolo Pinotti

    (Universitat Pompeu Fabra)

Abstract

This paper provides an empirical analysis of the role of political institutions in privatization. The empirical testing relies on a new political database with continuous and time-varying measures of the political-institutional setting, and of the partisan orientation of the executive. Using panel data for 21 industrialized countries in the 1977-1999 period, first we show the likelihood and the extent of privatization to be strongly and positively associated with majoritarian political systems. On the contrary, in consensual democracies privatization seems delayed by a “war of attrition” among different political actors. Second, we identify a partisan determinant of the choice of the privatization method. As theory predicts, right wing executives with re-election concerns design privatization to spread share ownership among domestic voters.

Suggested Citation

  • Bernardo Bortolotti & Paolo Pinotti, 2003. "The Political Economy of Privatization," Working Papers 2003.45, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2003.45
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    References listed on IDEAS

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    12. Marco Pagano & Paolo Volpin, 2001. "The Political Economy of Finance," Oxford Review of Economic Policy, Oxford University Press, vol. 17(4), pages 502-519.
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    Citations

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    Cited by:

    1. Alberto Cavaliere & Simona Scabrosetti, 2008. "Privatization And Efficiency: From Principals And Agents To Political Economy," Journal of Economic Surveys, Wiley Blackwell, vol. 22(4), pages 685-710, September.
    2. Kira Boerner, 2004. "The Political Economy of Privatization: Why Do Governments Want Reforms?," Working Papers 2004.106, Fondazione Eni Enrico Mattei.
    3. Bortolotti, Bernardo & de Jong, Frank & Nicodano, Giovanna & Schindele, Ibolya, 2007. "Privatization and stock market liquidity," Journal of Banking & Finance, Elsevier, vol. 31(2), pages 297-316, February.
    4. Polterovich, Victor, 2013. "Приватизация И Рациональная Структура Собственности. Часть 2. Рационализация Структуры Собственности
      [Privatization and the rational ownership structure. Part 2: rationalization of the ownership st
      ," MPRA Paper 64374, University Library of Munich, Germany.
    5. Börner, Kira, 2004. "The Political Economy of Privatization," Discussion Papers in Economics 296, University of Munich, Department of Economics.
    6. Bernardo Bortolotti & Mara Faccio, 2004. "Reluctant Privatization," Working Papers 2004.130, Fondazione Eni Enrico Mattei.
    7. Andreas Kuhlmann, 2005. "Privatization Incentives - A Wage Bargaining Approach," ifo Working Paper Series 18, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    8. A. Marra & V. Carlei, 2014. "Institutional Environment And Partial Privatizations: Policy Implications For Local Governments," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 85(1), pages 31-52, March.
    9. Bernardo Bortolotti, 2005. "Political Institutions and Privatisation Policy," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 3(1), pages 12-18, 04.
    10. Anders Sundell & Victor Lapuente, 2012. "Adam Smith or Machiavelli? Political incentives for contracting out local public services," Public Choice, Springer, vol. 153(3), pages 469-485, December.
    11. repec:eee:corfin:v:46:y:2017:i:c:p:232-247 is not listed on IDEAS
    12. Polterovich (Полтерович), Victor (Виктор), 2013. "Приватизация И Рациональная Структура Собственности. Часть 2. Рационализация Структуры Собственности
      [Privatization and the rational ownership structure. Part 2: rationalization of the ownership st
      ," MPRA Paper 64168, University Library of Munich, Germany.
    13. Polterovich, Victor, 2012. "Приватизация и рациональная структура собственности (Privatizatsiya i ratsional’naya struktura sobstvennosti)
      [Privatization and the Rational Ownership Structure]
      ," MPRA Paper 41069, University Library of Munich, Germany.
    14. Boehmer, Ekkehart & Nash, Robert C. & Netter, Jeffry M., 2005. "Bank privatization in developing and developed countries: Cross-sectional evidence on the impact of economic and political factors," Journal of Banking & Finance, Elsevier, vol. 29(8-9), pages 1981-2013, August.

    More about this item

    Keywords

    Political institutions; Partisan politics; Privatization;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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