Bureaucracies in the Russian Voucher Privatisation

SITE Working Paper No. 136

Posted: 15 Dec 1998

See all articles by Guido Friebel

Guido Friebel

Goethe University Frankfurt; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Date Written: August 1998

Abstract

The paper analyzes the implementation of privatization in Russia in the framework of incentive theory. The central government needs the support of local privatization agencies. They possess private knowledge concerning: a) their personal reform attitude; b) local privatization conditions. According to the tradeoff between rent extraction and efficiency, the speed of privatization (the efficiency goal) is constrained by the informational rents that the government must pay to local agents. Through voucher privatization, the government learns about local privatization conditions. Surprisingly, this additional information does not necessarily lead to more privatization. In fact, the government may even slow down reforms in order to save on bureaucrats' rents. This result of the model matches with the facts of Russian privatization in 1992/93.

JEL Classification: P21

Suggested Citation

Friebel, Guido, Bureaucracies in the Russian Voucher Privatisation (August 1998). SITE Working Paper No. 136, Available at SSRN: https://ssrn.com/abstract=142909

Guido Friebel (Contact Author)

Goethe University Frankfurt ( email )

Gr├╝neburgplatz 1
Frankfurt am Main, 60323
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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