Privatization Under Political Interference: Evidence from Eastern Germany

European Economic Review, Vol. 42, 1998

Posted: 6 Dec 1998

See all articles by Harald Hau

Harald Hau

University of Geneva - Geneva Finance Research Institute (GFRI); Swiss Finance Institute; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

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

Hau, Harald, Privatization Under Political Interference: Evidence from Eastern Germany. European Economic Review, Vol. 42, 1998, Available at SSRN: https://ssrn.com/abstract=141728

Harald Hau (Contact Author)

University of Geneva - Geneva Finance Research Institute (GFRI) ( email )

40 Boulevard du Pont d'Arve
Geneva 4, Geneva 1211
Switzerland

Swiss Finance Institute

Switzerland

Centre for Economic Policy Research (CEPR)

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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