ABSTRACT
There are theoretical arguments favouring public and private ownership. The difference starts with the very objectives of the owners in the two cases. The owners of both face a similar agency problem, of how agents are encouraged to meet the principals’ objectives. A common criticism of public ownership is that the monitoring of enterprises tends to be poor. Broadly two empirical approaches have been used to measure the impact of privatisation on firms’ post-privatisation performance and efficiency. First, comparing performance of government-owned firms to privately owned firms. Second, comparing pre and post divestment performance for companies privatised. There are a number of methodological issues with both approaches. Another aspect to consider is distributional impact of privatisation. Selling assets to elites may concentrate political power and economic wealth into fewer hands. Successful privatisation requires transparent procedures and selection of methods to check on corruption.
