IDEAS home Printed from
   My bibliography  Save this paper

The Three Knots on Voucher Privatization


  • Oldrich Kyn

    (Boston University)

  • Michal Mejstrik

    (Charles University, Prague)

  • Zdenek Blaha


  • Jan Mladek



This paper is discussing problems that emerged in the first wave of the voucher privatization in Czechoslovakia (January 1992). The first problem relates to the procedures for evaluation and approval of enterprises’ privatization projects. The original design of the privatization assumed a very quick mass distribution of state property through the voucher method. It was expected that the privatization projects would be simple, with virtualy all the property going to vouchers, and that it would be easy to evaluate them quickly. Only after the first round of voucher privatization started the rules for submitting privatitzation projects were changed and as a result thousands of competing projects began to emerge. The thorough evaluation of them would require an immeasurable amount of work. The following lesson follows from this experience for the second wave of privatization: hold to an originally agreed upon strategy and do not change the rules during the game. A second important set of problems is caused by unclear rules for the attainment of equilibrium between supply and demand during the first wave of voucher privatization. A full knowledge of this algorithm is very important for investors' choice of a successful strategy. The final set of problems is the absence of the law on investment companies and on securities trading. That creates at least two serious problems. The first is the protection of the small investor against the abuse of power by the strong investment funds' administrators. The second important problem is that the fund administrators and advisers will not be able to choose an optimal investment strategy as long as they do not know what rules will be set during the course of the privatization process or after its termination. Perhaps the most important lesson comes from the acknowledged fact that the best protection of the small investor is the increasing competition between funds.

Suggested Citation

  • Oldrich Kyn & Michal Mejstrik & Zdenek Blaha & Jan Mladek, 2005. "The Three Knots on Voucher Privatization," Development and Comp Systems 0511004, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpdc:0511004
    Note: Type of Document - html

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    Voucher Privatization; Czechoslovakia;

    JEL classification:

    • O - Economic Development, Innovation, Technological Change, and Growth
    • P - Economic Systems

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpdc:0511004. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.