Firm Ownership and Economic Efficiency
The objective in this paper is to improve the existing evidence regarding the role ownership plays in economic efficiency. It is pursued through enhancements in modeling, estimation techniques, and experimental design. With respect to modeling, state ownership is explicitly introduced into the simple model of the financially constrained firm in order to trace its implications. In turn, the interrelated, three-equation input demand model that emerges is estimated with consistent panel data techniques, using information gathered from state and private firms that operated in large-scale Greek manufacturing during the 1979-1988 period. The results show that, per unit of output, the amounts of labor, capital, and credits employed by state firms were 15.7, 12.2, and 49.1 percent larger than those employed by private firms in the same industries. Moreover, taking input prices into consideration, these findings indicated that state firms incurred 46.2 percent higher costs per unit of output and that liable for their relative inefficiency were technical, allocative and ownership reasons by contributing respectively 16.3, 25.5 and 4.4 percentage points. Last, but not least, state ownership was found to alter significantly the conventional patterns in which the employment of inputs responds to equity and input price changes. Thus, in contrast to claims made by some researchers, state ownership may influence economic efficiency as well as exercise several other important effects.
|Date of creation:||12 Mar 2003|
|Date of revision:|
|Note:||Type of Document - Acrobat.pdf; prepared on IBM PC - PC; to print on HP/PostScript; pages: 31 ; figures: included. Acrobat PDF document submitted via ftp.|
|Contact details of provider:|| Web page: http://econwpa.repec.org|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Zhenhui Xu & Melissa Birch, 1999. "The Economic Performance of State-owned Enterprises in Argentina an Empirical Assessment," Review of Industrial Organization, Springer, vol. 14(4), pages 355-375, June.
- Nadiri, M Ishaq & Rosen, Sherwin, 1969. "Interrelated Factor Demand Functions," American Economic Review, American Economic Association, vol. 59(4), pages 457-71, Part I Se.
- J. A. Hausman, 1976.
"Specification Tests in Econometrics,"
185, Massachusetts Institute of Technology (MIT), Department of Economics.
- Rafael La Porta & Florencio López-de-Silanes, 1999. "The Benefits of Privatization: Evidence from Mexico," The Quarterly Journal of Economics, Oxford University Press, vol. 114(4), pages 1193-1242.
- De Fraja, Giovanni, 1991. "Efficiency and Privatisation in Imperfectly Competitive Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 39(3), pages 311-21, March.
- Holtz-Eakin, Douglas & Newey, Whitney & Rosen, Harvey S, 1988.
"Estimating Vector Autoregressions with Panel Data,"
Econometric Society, vol. 56(6), pages 1371-95, November.
- Tom Doan, . "RATS program to demonstrate IV estimation of VAR in panel data," Statistical Software Components RTZ00185, Boston College Department of Economics.
- Ohlsson, H., 1995.
"Ownership and Input Prices a Comparison of Public and Private Entreprises,"
1995-08, Uppsala - Working Paper Series.
- Ohlsson, Henry, 1996. "Ownership and input prices: A comparison of public and private enterprises," Economics Letters, Elsevier, vol. 53(1), pages 33-38, October.
- Ehrlich, Isaac & Georges Gallais-Hamonno & Zhiqiang Liu & Randall Lutter, 1994. "Productivity Growth and Firm Ownership: An Analytical and Empirical Investigation," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 1006-38, October.
- Katsoulacos Yannis, 1994. "Firms' Objectives in Transition Economies," Journal of Comparative Economics, Elsevier, vol. 19(3), pages 392-409, December.
- Arellano, Manuel, 1989.
"A note on the Anderson-Hsiao estimator for panel data,"
Elsevier, vol. 31(4), pages 337-341, December.
- Arellano, M., 1989. "A Note On The Anderson-Hsiao Estimator For Panel Data," Economics Series Working Papers 9975, University of Oxford, Department of Economics.
- Vining, Aidan R & Boardman, Anthony E, 1992. "Ownership versus Competition: Efficiency in Public Enterprise," Public Choice, Springer, vol. 73(2), pages 205-39, March.
- Andrei Shleifer, 1998.
"State versus Private Ownership,"
Journal of Economic Perspectives,
American Economic Association, vol. 12(4), pages 133-150, Fall.
- Andrei Shleifer, 1998. "State Versus Private Ownership," Harvard Institute of Economic Research Working Papers 1841, Harvard - Institute of Economic Research.
- Andrei Shleifer, 1998. "State Versus Private Ownership," NBER Working Papers 6665, National Bureau of Economic Research, Inc.
- Pranab Bardhan and John E. Roemer., 1991.
"Market Socialism: A Case for Rejuvenation,"
Economics Working Papers
91-175, University of California at Berkeley.
- Douglas Holtz-Eakin & Whitney K. Newey & Harvey S. Rosen, 1987.
"The Revenues-Expenditures Nexus: Evidence from Local Government Data,"
NBER Working Papers
2180, National Bureau of Economic Research, Inc.
- Holtz-Eakin, Douglas & Newey, Whitney & Rosen, Harvey S, 1989. "The Revenues-Expenditures Nexus: Evidence from Local Government Data," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(2), pages 415-29, May.
- Paul H. Malatesta & Kathryn L. DeWenter, 2001. "State-Owned and Privately Owned Firms: An Empirical Analysis of Profitability, Leverage, and Labor Intensity," American Economic Review, American Economic Association, vol. 91(1), pages 320-334, March.
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpmi:0303002. 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)
If references are entirely missing, you can add them using this form.