1 option
Privatization, Risk-Taking, and the Communist Firm / Dominique Demougin, Hans-Werner Sinn.
- Format:
- Book
- Author/Creator:
- Demougin, Dominique.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w4205.
- NBER working paper series no. w4205
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 1992.
- Summary:
- This paper studies alternative methods of privatizing a formerly communist firm in the presence of imperfect risk markets. The methods include cash sales, a give-away scheme, and a participation contract where the government retains a sleeping fractional ownership in the firm. It is shown that, with competitive bidding, the participation contract dominates cash sales because it generates both more private restructuring investment and a higher expected present value of revenue for the government. Under weak conditions, the participation contract will induce more investment than the giveaway scheme, and it may even share the cash sales' virtue of incentive compatibility.
- Notes:
- Print version record
- November 1992.
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