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Nationalizations and effciency

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  • Crivelli, Ernesto
  • Staal, Klaas

Abstract

We develop a theoretical model in which ?rms are either private or state-owned. When ?rms become insolvent, the government can intervene with general measures, like subsidies, or by nationalizing ?rms. The government only intervenes when the bankruptcy of a ?rm entails social costs. In a stylized model, we analyze how government interventions a?ect allocative and productive efficiency. Nationalization of private ?rms in case unpro?table investments were made, leads to increased allocative efficiency despite private ownership. The effort level chosen by the managers working for ?rms is also affected by government intervention with an impact on productive efficiency.

Suggested Citation

  • Crivelli, Ernesto & Staal, Klaas, 2009. "Nationalizations and effciency," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 268, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    • Handle: RePEc:trf:wpaper:268
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    References listed on IDEAS

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    More about this item

    Keywords

    nationalization; efficiency;

    JEL classification:

    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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