Mass Privatization and Partial State Ownership of Forms in Transition Economies

Posted: 8 Feb 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)

Saul Estrin

London School of Economics & Political Science (LSE); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

James W. Maw

Swansea University - Department of Economics

Date Written: November 2000

Abstract

In their privatization programs, transition governments have frequently given away shares (so-called 'mass privatization'), while maintaining significant minority ownership. We explain the rationality of this behavior for an expected net-revenue maximizing government. Our argument rests on a political feasibility constraint, preventing sale at a negative price. The constraint raises to zero prices that would otherwise be negative, and has an indirect effect: mass privatization and partial retained state ownership may be chosen even if sale of a firm's entire assets would fetch a positive price. They are more likely to be chosen if the government has low bargaining power.

Keywords: privatization, state ownership, transition economics

JEL Classification: L33, P21

Suggested Citation

Bennett, John and Estrin, Saul and Maw, James W., Mass Privatization and Partial State Ownership of Forms in Transition Economies (November 2000). Available at SSRN: https://ssrn.com/abstract=259192

John Bennett (Contact Author)

Brunel University London - Economics and Finance ( email )

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

Institute for the Study of Labor (IZA)

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

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

Singleton Park
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

Saul Estrin

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

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

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)

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
826
PlumX Metrics