IDEAS home Printed from https://ideas.repec.org/a/cem/jaecon/v3y2000n1p1-55.html
   My bibliography  Save this article

A Positive Theory of Privatization

Author

Listed:
  • Arieh Avishur

    (Ben-Gurion University)

Abstract

This paper presents a theory that explains the prevalence of different models of privatization across countries and across industries. First, it establishes the analytical framework for determining the impact of privatization on the value of a privatized firm, on aggregate social welfare, and on the relevant interest groups: taxpayers, consumers, employees, and private investors. Merging both the income distribution and the production efficiency aspects of the process, it identifies the government's principal decision variables, and presents the political tradeoffs faced by the government when carrying out privatization. Based on this framework, the paper offers an outline for testing the hypothesis that privatization introduces a Pareto-dominating mode of operation. Two fundamental laws of privatization define necessary and sufficient conditions for Pareto-dominance. Based on four economically sensible principal assumptions, the paper analyzes the government's behavior under alternative objective functions: maximization of taxpayer welfare, maximization of aggregate social welfare, and maximization of political support. The main result reveals that a vote-maximizing government sets the optimal value of its decision variables, depending on the characteristics of the political market. This result is illustrated through a cross-country and a cross-industry comparison.

Suggested Citation

  • Arieh Avishur, 2000. "A Positive Theory of Privatization," Journal of Applied Economics, Universidad del CEMA, vol. 3, pages 1-55, May.
    • Handle: RePEc:cem:jaecon:v:3:y:2000:n:1:p:1-55
    as

    Download full text from publisher

    File URL: https://ucema.edu.ar/publicaciones/download/volume3/avishur.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lily Jiang, 2006. "Welfare Analysis Of Privatization In A Mixed Market With Bargaining," Contemporary Economic Policy, Western Economic Association International, vol. 24(3), pages 395-406, July.
    2. Samuel Adams & Berhanu Mengistu, 2008. "The Political Economy of Privatization in Sub‐Saharan Africa," Social Science Quarterly, Southwestern Social Science Association, vol. 89(1), pages 78-94, March.
    3. Druk-Gal, Bat-Sheva & Yaari, Varda, 2006. "Incumbent employees' resistance to implementing privatization policy," Journal of Economic Behavior & Organization, Elsevier, vol. 59(3), pages 374-405, March.
    4. Steve Kayizzi-Mugerwa, 2002. "Privatization in Sub-Saharan Africa: On Factors Affecting Implementation," WIDER Working Paper Series DP2002-12, World Institute for Development Economic Research (UNU-WIDER).
    5. David Parker & Colin Kirkpatrick, 2005. "Privatisation in Developing Countries: A Review of the Evidence and the Policy Lessons," Journal of Development Studies, Taylor & Francis Journals, vol. 41(4), pages 513-541.
    6. Willner, Johan & Parker, David, 2002. "The Relative Performance of Public and Private Enterprise Under Conditions of Active and Passive Ownership," Centre on Regulation and Competition (CRC) Working papers 30591, University of Manchester, Institute for Development Policy and Management (IDPM).

    More about this item

    Keywords

    privatization; positive economics; political tradeoffs; Popular Capitalism; Nomenklatura Companies.;
    All these keywords.

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cem:jaecon:v:3:y:2000:n:1:p:1-55. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Valeria Dowding (email available below). General contact details of provider: https://edirc.repec.org/data/cemaaar.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.