The Welfare and Political Economy Dimensions of Private versus State Enterprise
Abstract:We revisit the theoretical debate concerning the merits of privatization by decomposing the welfare effect of transferring an enterprise from public to private ownership. A range of effects is considered including overproduction, subsidy valuation, redistribution, ownership and regulatory effects. The potential gains/losses from privatization are examined by considering the initial conditions facing enterprises under public ownership (whether technically and/or economically efficient) and a range of post-privatization market structures (whether monopoly, oligopoly or Walrasian).
Document Type: Original Article
Publication date: 2002-03-01