How Does Privatization Work? Evidence from the Russian Shops

Abstract

A number of recent studies have testified to the benefits of private as opposed to state ownership of firms. One research strand compares private and state firms in the same line of activity, such as air transport or railroads, and finds the former to be more efficient (see Boardman and Vining, 1989, for a survey). A second strand reveals the improvements in a given company's operations following privatization (see Megginson et al., 1994). A third strand documents the lower cost of contracting public services to private suppliers than providing it publicly (see Donahue, 1989). This research makes a convincing case for the greater efficiency of private ownership.

JEL Classification: G30