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Volkswirtschaft - Open Access LMU - Teil 01/03 Podcast
The Political Economy of Privatization

The Political Economy of Privatization

Volkswirtschaft - Open Access LMU - Teil 01/03 vor 22 Jahren

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International organizations promote privatization as precondition
for economic development. But is there really too little
privatization? This political economy model asks for the incentives
of governments to privatize or restructure a state-owned firm.
Different government types are compared to identify the political
and institutional determinants of privatization. Under
privatization, governments commit not to influence the
profit-maximizing employment choice by private investors. With
respect to the social optimum, both voter-oriented and egoistic
governments can have inefficiently high incentives to privatize.
When this is the case, outside pressure to privatize is
detrimental. An improving institutional environment reduces these
inefficiencies.