Privatization and Efficiency: from Principals and Agents to Political Economy

Alberto Cavaliere
Authors registered in the RePEc Author Service: Simona Scabrosetti

No 2006.99, Working Papers from Fondazione Eni Enrico Mattei

Abstract: We survey the theoretical literature on privatization and efficiency by tracing its evolution from the applications of agency theory to recent contributions in the field of political economy. The first ones extend the theory of regulation with incomplete information to address privatization issues, comparing State Owned Entreprises (SOEs) with private regulated firms. The benefits of privatization may either derive from the constraints it places on malevolent agents or to the impossibility of commitment by a benevolent government because of incomplete contracts. Contributions dealing with political economy issues separate privatization from restructuring decisions. They either explore bargaining between managers and politicians or analyze the impact of privatization shaped by political preferences on efficiency. The theoretical results regarding the relation between privatization and efficiency do not lead to any definitive conclusion. Privatization may increase productive efficiency when restructuring takes place whereas its effects on allocative efficiency still remain uncertain.

Keywords: Regulation; Imperfect Information; Political Preferences (search for similar items in EconPapers)
JEL-codes: D82 L33 P26 (search for similar items in EconPapers)
Date: 2006-06
New Economics Papers: this item is included in nep-pke and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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Related works:
Journal Article: PRIVATIZATION AND EFFICIENCY: FROM PRINCIPALS AND AGENTS TO POLITICAL ECONOMY (2008)
Working Paper: Privatization and Efficiency: From Principals and Agents to Political Economy (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2006.99

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