EconPapers    
Economics at your fingertips  
 

Priorities and Sequencing in Privatization: Theory and Evidence from the Czech Republic

Nandini Gupta, John Ham () and Jan Svejnar ()

No 1580, Econometric Society World Congress 2000 Contributed Papers from Econometric Society

Abstract: While privatization of state-owned enterprises has been one of the most important aspects of economic transition from a centrally planned to a market system, no transition economy has privatized all its firms simultaneously. This raises the issue of whether governments strategically privatize firms. In this paper we examine theoretically and empirically determinants of the sequencing of privatization. First, we adapt and develop theoretical models in order to obtain testable predictions about factors that affect the sequencing of privatization. In doing so, we characterize government objectives as (i) increasing economic efficiency, (ii) maximizing sales revenue from privatization or public goodwill from transferring shares of firms to voters, and (iii) reducing political costs due to layoffs. Next, we use an enterprise-level data set from the Czech Republic to test the competing theoretical predictions about which firm characteristics affect the sequencing of privatization. We find strong evidence that more profitable firms were sold first. This outcome suggests that the government sequenced the sale of firms to maximize sale revenues and/or public goodwill from subsidized share transfers to citizens. In addition to enhancing the general understanding of privatization, our evidence suggests that many empirical studies of the effects of privatization on firm performance may suffer from selection bias since privatized firms are likely to have observable and unobservable characteristics that make them more profitable than the firms that are not privatized.

Date: 2000-08-01
References: Add references at CitEc
Citations: View citations in EconPapers (40) Track citations by RSS feed

Downloads: (external link)
http://fmwww.bc.edu/RePEc/es2000/1580.pdf main text (application/pdf)

Related works:
Working Paper: Priorities and Sequencing in Privatization: Theory and Evidence from the Czech Republic (2000) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecm:wc2000:1580

Access Statistics for this paper

More papers in Econometric Society World Congress 2000 Contributed Papers from Econometric Society Contact information at EDIRC.
Bibliographic data for series maintained by Christopher F. Baum ().

 
Page updated 2019-04-08
Handle: RePEc:ecm:wc2000:1580