An efficient privatization mechanism.

Anbarcia, N. Karaaslanb; M, E.

Abstract

We consider the privatization of State-Owned Enterprises (SOEs) of which markets can be opened to competition once privatization takes place and competitors can compete successfully against them in a few years. The currently used “Revenue Maximization (RM)” scheme maximizes the government revenue from privatization but does not provide incentives for the privatized SOE to charge a price lower than the monopoly price until competition arises. We propose the “Welfare Maximization (WM)” scheme, which induces the privatized SOE to charge a competitive price without resorting to regulation. Also, WM provides greater incentives for post-privatization cost reduction.

Citation

Anbarcia, N. K., & M, E. (1998). An efficient privatization mechanism. The journal of policy reform, 2(1), 73-87. https://doi.org/10.1080/13841289808523374

• Journal Article Type: Article
• Publication Date: 1998-02
• Deposit Date: Aug 17, 2018
• Journal: The Journal of Policy Reform
• Print ISSN: 1384-1289
• Electronic ISSN: 1477-2736
• Publisher: Routledge
• Peer Reviewed: Peer Reviewed
• Volume: 2
• Issue: 1
• Pages: 73-87
• DOI: https://doi.org/10.1080/13841289808523374
• Public URL: https://durham-repository.worktribe.com/output/1351471