SFB 303 Discussion Paper No. A - 376
Author: Bös, Dieter
Title: Privatisation in Europe: A Comparison of Approaches
Abstract: The paper compares privatisation in selected European countries, namely
the UK and West Germany from the West, and Czechoslovakia, East Germany,
Hungary and Poland from Central and Eastern Europe. It argues that
privatisation can only be efficient if it implies divestiture. Changes in
objectives, as brought about by privatisation, are treated by comparing
various principal-agent settings which show that it is superficial to say
that privatization of monopolistic enterprises in capitalistic economies
implies a move from welfare maximisation to profit maximisation. (A similar
argument on too superficial statements holds for post-communist countries.)
Finally, distributional policies are treated. It is argued that popular
capitalism is a bad instrument for redistribution and that employees' shares
in post-communist countries are not equitable. Distributional pricing is
abolished if a privatised firm operates in a competitive market. However,
distributional pricing is implicitly applied by a monopolistic privatised
firm which is regulated (RPI-X) and maximises profits.
Keywords:
JEL-Classification-Number:
Creation-Date: 1992
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