We consider the privatization of State-Owned Enterprises (SOEs) of which markets can be opened to competition once privatization takes place and competitors can compete successfully against them in a few years. The currently used "Revenue Maximization (RM)" scheme maximizes the government revenue from privatization but does not provide incentives for the privatized SOE to charge a price lower than the monopoly price until competition arises. We propose the "Welfare Maximization (WMY scheme, which induces the privatized SOE to charge a competitive price without resorting to regulation. Also, WM provides greater incentives for post-privatization cost reduction.
Field of Research
160505 Economic Development Policy 140213 Public Economics- Public Choice
Socio Economic Objective
970116 Expanding Knowledge through Studies of Human Society
Every reasonable effort has been made to ensure that permission has been obtained for items included in DRO. If you believe that your rights have been infringed by this repository, please contact firstname.lastname@example.org.