ABSTRACT
Deregulation and privatization have stirred a wide international debate about copying the American and British examples but fairly little has happened in other countries with few exceptions such as New Zealand, Chile, and Bangladesh. Governments hesitate to sell public enterprises that make money while private buyers shy away from public enterprises that lose money. While nationalization after privatization is feasible, it is more difficult than a mere change in the policy direction of existing public enterprises. One of the difficulties in renationalization lies in the fact that the new private owners, managers and remaining employees gain a vested interest in the privatized firm. The most important commitment that privatization may carry with it is that to competition. The market discipline is hard on firms and therefore hard to maintain in an environment of public enterprises. If one or several of the efficiency or political changes in favor of privatization have occurred, then privatization still is not the necessary outcome.
