The performance of public and private enterprise under conditions of active and passive ownership and competition and monopoly

Johan Willner, David Parker

Research output: Contribution to journalArticleScientificpeer-review

31 Citations (Scopus)

Abstract

Privatisation is driven by the belief that public ownership is cost inefficient, in particular under monopoly. However, some theoretical and empirical studies have questioned whether privatisation will necessarily lead to efficiency gains. This paper focuses on the impact of ownership when owners can be either active or passive. Active owners decide on output, whereas passive owners delegate this decision to a risk-averse manager. It turns out that managerial slack as reflected in the marginal costs will actually be the same or higher in a private monopoly than under public ownership. The impact of entry is theoretically ambiguous, but an increased number of firms in an oligopoly may lead to lower efficiency. © 2007 Springer-Verlag Wien.
Original languageEnglish
Pages (from-to)221-253
Number of pages33
JournalJournal of Economics
Volume90
Issue number3
DOIs
Publication statusPublished - Apr 2007
MoE publication typeA1 Journal article-refereed

Keywords

  • Managerial slack
  • Privatisation
  • Public ownership

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