The Big Sell: Privatizing East Germany's Economy

87 Pages Posted: 17 Sep 2020

See all articles by Lukas Mergele

Lukas Mergele

BSS Volkswirtschaftliche Beratung

Moritz Hennicke

Université Libre de Bruxelles (ULB)

Moritz Lubczyk

ZEW Mannheim

Date Written: 2020

Abstract

Departing from communism, East Germany witnessed history’s most extensive privatization program. While the program sparked global interest as a blueprint for privatization, its effectiveness remains disputed. Using unique firm-level data, we examine the program’s objective to privatize the most competitive firms. We document that firms with higher baseline productivity are more likely to be privatized, yield higher prices, are more often acquired by West Germans, and are more likely to survive 20 years later. Inspecting the inner workings of the privatization agency, we illustrate challenges and lessons for government interventions attempting to target the right firms to promote policy goals.

Keywords: privatization, labor productivity, German reunification

JEL Classification: D240, G380, H110, L330, P310

Suggested Citation

Mergele, Lukas and Hennicke, Moritz and Lubczyk, Moritz, The Big Sell: Privatizing East Germany's Economy (2020). CESifo Working Paper No. 8566, Available at SSRN: https://ssrn.com/abstract=3694232 or http://dx.doi.org/10.2139/ssrn.3694232

Lukas Mergele (Contact Author)

BSS Volkswirtschaftliche Beratung ( email )

Aeschengraben 9
Basel, 4051
Switzerland

HOME PAGE: http://https://www.bss-basel.ch/

Moritz Hennicke

Université Libre de Bruxelles (ULB) ( email )

Moritz Lubczyk

ZEW Mannheim ( email )

Mannheim
Germany

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