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Privatization and the Risk of Expropriation

  • John Vickers
Part of the Central Issues in Contemporary Economic Theory and Policy book series (CICETP)

Abstract

When a firm is privatized, the power to make decisions affecting its well-being is transferred more or less from agents working for the government to agents working for the private sector (1). This paper is about the more or less, which is an important qualification, because in many cases of “privatization” the power to make a number of key decisions remains with, or at least might in the future be exercised by, the government itself. For example, government may be able substantially to vary future policy towards competition and regulation in the industry where the firm operates. It might have similar discretion over tax or trade policies that affect the firm specifically. And in the extreme a future gvernment might return the firm to public ownership, possibly on “unfair” terms (2). The catch-all term “expropriation” in the title of the paper reflects, perhaps in an unduly stark fashion, the fact that these measures have the potential significantly to reduce the private value of the privatized assets.

Keywords

Discount Rate Consumer Surplus Regulatory Risk Investment Incentive Investment Expenditure 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© SIPI Servizio Italiano Pubblicazioni Internazionali Srl 1993

Authors and Affiliations

  • John Vickers
    • 1
  1. 1.University of OxfordUK

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