ABSTRACT
That private enterprise is not always competitive and that competition is what matters to increase efficiency is the core of Jo Stiglitz’s approach to economic transformation, an approach shared by Saul Estrin and by many contributors to this volume, who have offered evidence in support of this position. However, to be fair to the eclectic discourse of institutional economics, one should also remember that for Stiglitz one main advantage of the private enterprise over the state enterprise is that the transaction costs needed to obtain state subsidies are higher for the former-which can be taken to mean that budget constraints do, indeed, hit harder in private business. Apart from the attractiveness of Stiglitz versus Stiglitz’s arguments in support of or against privatization as a means for improving efficiency, however, one needs to stress that the very dimensions of the problem of privatization in post-communist economies render any comparison with apparently similar problems in advanced market economies rather difficult to accept without qualifications.
