Ownership, efficiency, and political interference

Johan Willner*

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

52 Citations (Scopus)

Abstract

Privatisation is often explained by a desire to achieve efficiency. Some authors propose that the main reason for inferior performance under public ownership is interference from politicians who promote output and employment instead of profits to please voters. Western state-owned firms however typically operate in imperfectly competitive markets, or even in natural monopolies. Private ownership then leads to underprovision. This paper presents conditions under which political interference yields higher welfare than under commercial objectives, and vice versa. If effort affects utility, interference may be beneficial in a seemingly perfect market.

Original languageEnglish
Pages (from-to)723-748
Number of pages26
JournalEuropean Journal of Political Economy
Volume17
Issue number4
DOIs
Publication statusPublished - Nov 2001
MoE publication typeA1 Journal article-refereed

Keywords

  • Efficiency
  • L32
  • L33
  • L44
  • Privatisation
  • Public ownership

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