The Political Economy of Privatization

Kira Börner
Authors registered in the RePEc Author Service: Kira Boerner

Discussion Papers in Economics from University of Munich, Department of Economics

Abstract: International organizations promote privatization as precondition for economic development. But is there really too little privatization? This political economy model asks for the incentives of governments to privatize or restructure a state-owned firm. Different government types are compared to identify the political and institutional determinants of privatization. Under privatization, governments commit not to influence the profit-maximizing employment choice by private investors. With respect to the social optimum, both voter-oriented and egoistic governments can have inefficiently high incentives to privatize. When this is the case, outside pressure to privatize is detrimental. An improving institutional environment reduces these inefficiencies.

Keywords: political incentives; privatization; restructuring; employment (search for similar items in EconPapers)
JEL-codes: D72 D73 H82 L33 (search for similar items in EconPapers)
Date: 2004-01
New Economics Papers: this item is included in nep-com, nep-lam, nep-pbe and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:lmu:muenec:296

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