Privatization Under Political Interference: Evidence from Eastern Germany
European Economic Review, Vol. 42, 1998
Posted: 6 Dec 1998
Abstract
Can privatization authority be successfully delegated to a privatization agency? We address this question using micro data on 1,804 privatization and 1097 liquidation decisions of the German privatization agency "Treuhandanstalt". The theoretical part develops a dynamic model of optimal liquidation under incomplete political insulation of the privatization agency. It is explored how external political interference affects the agency's liquidation policy. We derive testable implications for the distribution of liquidation decisions and privatization prices. The micro data confirm the model predictions and the view that political liquidation constraints are an important determinant of privatization outcomes.
Note: This is a description of the paper and is not the actual abstract.
JEL Classification: L33, G33
Suggested Citation: Suggested Citation