ABSTRACT
This chapter is a follow-up to the previous chapter in that it assesses the privatization process and its results in post-soviet economies (PSEs) first from the standpoint of a Coasian analysis and the principal-agent model. The focus here is on the Russian privatization strategy (§1) since its designers had attempted to justify a basically political privatization target by several references to the Coase theorem and economic efficiency. Then the chapter goes on beyond this analytical framework in order to provide a more critical (non mainstream) evaluation of the unresolved transaction and governance cost issues that have arisen out of the initial privatization drive and that are pervasive in all PSEs during the post-privatization period (§2). We get to grips with some tricky and unexpected outcomes of privatization, namely in Russia, that can be traced back to the failure on the part of those who designed privatization to take into account transaction costs and corporate governance issues such as non-competitive markets, financial-industrial groups, corruption and violent entrepreneurship, managerial entrenchment, and residual State property. The chapter ends (§3) by drawing some analytical implications derived from the unexpected results of Russian privatization which, beyond the Coase theorem and the principal-agent model, call for more attention to institution building. Some policy options are discussed for the future of the postprivatization period in Russia.
