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The "How" of Privatization in Central and Eastern Europe


  • Huber, Peter

    (Institute for Advanced Studies, Vienna)


This paper analyzes how governments in transition economies, interested in their budgetary situation privatize large enterprises. While informal discussions favour voucher privatization my formal model of privatization suggests that voucher privatization may be hard to implement: In contrast to piecemeal privatization it generates no revenues that can be used to support workers which become unemployed. Therefore, from the political economy viewpoint piecemeal privatization will result in faster privatization unless governments have an ideological preference for private property or asymmetric information issues are important. The model therefore explains why governments other than the Czech have found it difficult to engage in voucher privatization.

Suggested Citation

  • Huber, Peter, 1995. "The "How" of Privatization in Central and Eastern Europe," East European Series 20, Institute for Advanced Studies.
  • Handle: RePEc:ihs:ihsrop:20

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    More about this item


    Privatization; Transition;

    JEL classification:

    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • P21 - Economic Systems - - Socialist Systems and Transition Economies - - - Planning, Coordination, and Reform
    • P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy


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