English, Article, Journal or magazine article edition: Mass Privatization, Management Control and Efficiency Dieter B”s; Phillipp Harms

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Bookmark: http://trove.nla.gov.au/version/49338
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Mass Privatization, Management Control and Efficiency
Author
  • Dieter B”s
  • Phillipp Harms
Physical Description
  • preprint
Notes
  • We present a model where a government chooses the number of individuals to which ownership in a former state-owned firm shall be allocated. When making this decision the government maximizes the political support it gets from the firm's incumbent manager and from potential shareholders, anticipating that a greater dispersion of shares reduces the control of the manager by the firm's new owners. It turns out that shares will be allocated to the maximum number of individuals - and thus a policy of mass privatization will be implemented - if the manager's utility enters the political support function with a higher weight than the welfare of the potential shareholders. The result of the political process, however, need not conflict with the objective of achieving a Pareto-optimal allocation. Thus we contradict a widely shared presumption that mass privatization schemes sacrifice efficiency to satisfy political constraints and show that they can be very attractive from an efficiency point of view.
  • Privatization, Vouchers, Economic Reform
  • RePEc:bon:bonsfa:475
Language
  • English
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