Economic Perspectives on Privatization

Abstract

Despite being one of the most fundamental issues in political economy, the question of the appropriate boundary between public and private enterprise received relatively little attention in mainstream economic analysis until quite recently. In the 1980s, however, programs of ownership reform were started in many developed and developing countries. Dramatic though some of these policies have been, they are likely to be overshadowed in the 1990s by even greater privatization in the reforming socialist economies. The opening sections of this paper are organized around three broad and interrelated questions. How does ownership matter for the efficiency of enterprise performance? What is the role for privatization in financing public debts and deficits? What are the distributional and political implications of privatization? Finally we examine privatization in practice in three countries: Britain, Chile, and Poland.

Ownership forms matter for airport efficiency: A stochastic frontier investigation of worldwide airports

“…De Fraja (1993) questions the logic of the main arguments, and shows, via a principal-agent model, that government ownership "is not only not necessarily less productively efficient, but in some circumstances more productively efficient". Vickers and Yarrow (1991) suggest that private ownership has efficiency advantages in competitive conditions, but not necessarily in the presence of market power. They further suggest that even under competitive market conditions, government ownership is not inherently less efficient than private ownership, and that competition is the key to efficiency rather than ownership per se.…”

Water supply: Public or private?

“…Competition and regulation would be more important than privatization in improving performances of firms (Bishop and Kay, 1989;Kay and Thompson, 1986;Vickers and Yarrow, 1991;Yarrow, 1986). Thus, in a fully competitive market, private ownership would be more efficient than the public one; but the answer would be less clear for less competitive markets like water supply and sanitation.…”

Gouvernance partenariale et performance organisationnelle : les enseignements des privatisations passées

“…L'auteur met en évidence la diversité des thèses propres à chaque courant contractuel. (Vickers et Yarrow, 1991). La deuxième implication, quant à elle, repose sur la neutralité de la propriété défendue par l'approche endogène de la propriété.…”