ABSTRACT
Corporatisation involves the internal reform of government owned corporations or government business enterprises (GBEs). The emphasis of corporatisation is to make the GBE operate more like a privately owned company. This chapter focuses on the delegated management of GBEs, on the agency costs of this delegated management, and on the role of corporatisation policies as a tool of GBE reform. Corporatisation has been a key part of GBE reform in Australia. The chapter considers the arguments both for and against corporatisation. It presents a simple framework for analysing the interaction between corporatisation and corporate governance. The chapter extends the basic model to consider the optimal level of corporatisation. It considers the interaction between corporatisation and anti-competitive behaviour by GBEs. Advocates of corporatisation sometimes claim that the public sector is relatively inefficient compared with the private sector. The arguments for corporatisation have often been superficial and void of economic analysis.
