DEMOUGIN, D ORCID: 0000-0002-1744-0390 and SINN, HW
(1994)
PRIVATIZATION, RISK-TAKING, AND THE COMMUNIST FIRM.
JOURNAL OF PUBLIC ECONOMICS, 55 (2).
pp. 203-231.
Text
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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. © 1994.
Item Type: | Article |
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Uncontrolled Keywords: | PRIVATIZATION, RISK THEORY, ECONOMIC TRANSFORMATION |
Depositing User: | Symplectic Admin |
Date Deposited: | 22 Aug 2016 10:38 |
Last Modified: | 19 Jan 2023 07:32 |
DOI: | 10.1016/0047-2727(94)90052-3 |
Related URLs: | |
URI: | https://livrepository.liverpool.ac.uk/id/eprint/3002942 |