Privatization, risk-taking, and the communist firm

Demougin, Dominique und Sinn, Hans-Werner (1994): Privatization, risk-taking, and the communist firm. In: Journal of Public Economics, Bd. 55, Nr. 2: S. 203-231

Abstract

This paper studies alternative methods of privatizing a formerly communist firm in the presence of imperfect risk markets. The methods include cash sales, a give-away scheme, and a participation contract where the government retains a sleeping fractional ownership in the firm. It is shown that, with competitive bidding, the participation contract dominates cash sales because it generates both more private restructuring investment and a higher expected present value of revenue for the government. Under weak conditions, the participation contract will induce more investment than the give-away scheme, and it may even share the cash sales’ virtue of incentive compatibility.

• Dokumententyp: Zeitschriftenartikel
• Fakultät: Volkswirtschaft ; Volkswirtschaft > Lehrstühle > Lehrstuhl für Nationalökonomie
• Themengebiete: 300 Sozialwissenschaften > 330 Wirtschaft
• Sprache: Englisch