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

    32 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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