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Partial Public Ownership and Managerial Incentives

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  • Jovanovic, Dragan

Abstract

We analyze the impact of partial public ownership (PPO) on managerial incentives. A novelty of the paper is that it explicitly considers competition in the product market. We find that PPO negatively affects managerial incentives when all firms are partially owned by the government. When partially public firms compete with private firms, the effects on managerial incentives crucially depend on the degree of competitive pressure. Thereby, PPO induces either partially public firms or their private competitors to offer stronger managerial incentives. This result is essentially confirmed even if the government's primary concern is consumer protection rather than social welfare.

Suggested Citation

  • Jovanovic, Dragan, 2012. "Partial Public Ownership and Managerial Incentives," VfS Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62039, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc12:62039
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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