Privatization, Investment and Ownership Efficiency
We provide a model that explains the following empirical observations: i) private ownership is more efficient than public ownership, ii) privatizations are associated with increases in efficiency and iii) the increase in efficiency predates the privatization. The two key mechanisms explaining the results are: (i) a government owner keeping control takes into account the negative effect on employment of investment and (ii) a privatizing government has a stronger incentive to invest than an acquiring firm: the government exploits the fact that investments increase the sales price not only due to the increase in the acquirer's profit, but also due to a reduced profit for the non-acquirer.
|Date of creation:||10 Apr 2008|
|Date of revision:|
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- Gérard Roland & Khalid Sekkat, 2000.
"Managerial career concerns, privatization and restructuring in transition economies,"
ULB Institutional Repository
2013/7340, ULB -- Universite Libre de Bruxelles.
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- Norbäck, Pehr-Johan & Persson, Lars, 2006.
"The Organization of the Innovation Industry: Entrepreneurs, Venture Capitalists and Oligopolists,"
CEPR Discussion Papers
5449, C.E.P.R. Discussion Papers.
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- Norbäck, Pehr-Johan & Persson, Lars, 2009. "The Organization of the Innovation Industry: Entrepreneurs, Venture Capitalists and Oligopolists," Working Paper Series 783, Research Institute of Industrial Economics.
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"Privatisation and market structure in a transition economy,"
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Elsevier, vol. 77(3), pages 357-382, September.
- John Bennett & James Maw, 1998. "Privatisation and Market Structure in a Transition Economy," William Davidson Institute Working Papers Series 175, William Davidson Institute at the University of Michigan.
- S. Baranzoni & P. Bianchi & L. Lambertini, 2000. "Multiproduct Firms, Product Differentiation, and Market Structure," Working Papers 368, Dipartimento Scienze Economiche, Universita' di Bologna.
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- Simeon Djankov & Gerhard Pohl, 1997. "Restructuring of Large Firms in Slovakia," William Davidson Institute Working Papers Series 73, William Davidson Institute at the University of Michigan.
- Bennedsen, Morten, 2000. "Political ownership," Journal of Public Economics, Elsevier, vol. 76(3), pages 559-581, June.
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