Privatisation and Market Structure in a Transition Economy

Posted: 1 Mar 2001

See all articles by John Bennett

John Bennett

Brunel University London - Economics and Finance; Institute for the Study of Labor (IZA); University of Wales, Swansea - School of Business and Economics; Centre for Economic Policy Research (CEPR)

James W. Maw

Swansea University - Department of Economics

Abstract

A model is developed in which an industry of firms is privatised. The 'participation' method of privatisation is used, whereby firms are sold for cash, but the state retains a proportionate share of ownership. In each firm the new private owner has the opportunity to make a reorganisational investment, before output is produced. This investment is unobservable by the state, and therefore non-contractible. There is Cournot competition in the product market. The welfare-maximising retained ownership share for the state is analysed, taking into account that potential buyers of firms may have limited access to finance.

Keywords: Privatisation, Transition economy, Market structure

JEL Classification: L33, P21

Suggested Citation

Bennett, John and Maw, James W., Privatisation and Market Structure in a Transition Economy. Journal of Public Economics, Vol. 77, No. 3, September 2000. Available at SSRN: https://ssrn.com/abstract=252536

John Bennett (Contact Author)

Brunel University London - Economics and Finance ( email )

Uxbridge UB8 3PH
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+44 1895 816 201 (Phone)
+44 1895 203 384 (Fax)

Institute for the Study of Labor (IZA)

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Germany

University of Wales, Swansea - School of Business and Economics ( email )

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Swansea, Wales SA2 8PP SA2 8PP
United Kingdom
+44 1792 295 168 (Phone)
+44 1792 295 872 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

James W. Maw

Swansea University - Department of Economics ( email )

James Callaghan Bldg.
Singleton Park Room 223
Swansea SA2 8PP
United Kingdom
+44 1792 295 168, ext. 40 (Phone)
+44 1792 295 716 (Fax)

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