Public Enterprises – Objectives and Performance

Public ownership is a way to provide goods and services where market performance is not satisfactory, or when the economy would otherwise be stagnant, provided that its costs do not overshadow its benefits. We provide a brief review of the existing theoretical and empirical literature. While far from exhaustive, the review suggests that there is no unanimous body of research showing that public ownership is inefficient to such an extent that private ownership is always socially superior. More research is needed on the costs and benefits of different forms of ownership, and we emphasise the need of analysing potential intrinsic motivation, service quality and the impact of international competition. Moreover, the fact that privatisation has often been implemented through outsourcing suggests a need of analysing renationalisation through buyer power.