Why did Transition Economies Choose Mass Privatization?

John Bennett (), Saul Estrin and James Maw
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Saul Estrin: London Business School,
James Maw: University of Wales Swansea,

Journal of the European Economic Association, 2005, vol. 3, issue 2-3, 567-575

Abstract: In many transition countries privatization has taken the form of distribution of states assets at a zero price (mass privatization), and the state has retained some ownership in many companies.We provide a rationale for these policies in terms of a political feasibility constraint, preventing sale at a negative price. The government may choose to retain some ownership in order to make the constraint bite, in effect raising its bargaining power. As a result, mass privatization may actually have been revenue-maximizing; that is, may have been rational in an economic sense, as well as in the political sense previously claimed. (JEL: L33, P21) Copyright (c) 2005 The European Economic Association.

Date: 2005
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