Public versus private ownership : the current state of the debate

By M. Shirley, Patrick Paul Walsh. 2000

401 citations recorded by the source corpus.

At the heart of the debate about public versus private ownership lie three questions: 1) Does competition matter more than ownership? 2) Are state enterprises more subject to welfare-reducing interventions by government than private firms are? 3) Do state enterprises suffer more from governance problems than private firms do? Even if the answers to these questions favor private ownership, the question must still be asked: Do distortions in the process of privatization mean that privatized firms perform worse than state enterprises? The author's review found greater ambiguity about the merits of privatization and private ownership in the theoretical literature than in the empirical literature. In most cases, empirical research strongly favors private ownership in competitive markets over a state-owned counterfactual (although construction of the counterfactual is itself a problem). Theory's ambiguity about ownership in monopoly markets seems better justified. Since the choice confronting governments is between state ownership and privatization rather than between privatization and optimality, theory has left a gap that empirical work has tried to fill. Further research is needed.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/71d5b630e79b32464c8c2b5484f1a0425d4124c3

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Citations in the corpus

Institutions and Organizational Structure: The Case of State-Owned Corporate Pyramids (2013, background): “Moreover, Shirley and Walsh (2001) discuss the potential effect of setting up a corporation on government intervention: “if an enterprise is run as a department of a”
Ownership as a Form of Corporate Governance (2010, positive): “Recognition of the benefits of private ownership has spawned research about how best to privatize state owned firms (Shirley and Walsh, 2001), with the preponderance of research being focused on transition economies (Djankov and Murrell, 2002).”
From State to Market: A Survey of Empirical Studies on Privatization (2001, neutral): “(Shirley and Walsh (2000) provide additional discussion of the effects of competition on the privatization decision.)”
Rise of the Fiduciary State: A Survey of Sovereign Wealth Fund Research (2014, neutral): “3 Some definitions are broader than this, as in Truman (2008), who defines a sovereign wealth fund as “a separate pool of government-owned or government-controlled financial assets that includes some international assets.”
Privatization and Efficiency: From Principals and Agents to Political Economy (2008, neutral): “Other surveys can be found in Sheshinski and Lopez-Calva (2003), Bortolotti and Siniscalco (2004) and Shirley and Walsh (2004) .”
Has Private Participation in Water and Sewerage Improved Coverage? Empirical Evidence from Latin America (2004, background): “Recent literature surveys have shown that privatisation generally led to improvements in firm performance in several sectors around the world (Megginson and Netter, 2001; Shirley and Walsh, 2001; Kessides, 2004; Megginson, 2005).”
Foreign Direct Investment in Infrastructure in Developing Countries: Does Regulation Make a Difference? (2004, background): “The available evidence on the effects of 152 Transnational Corporations, Vol. 15, No. 1 (April 2006) privatization in less developed countries suggests that, in general, privatization has improved the economic performance of former SOEs (Parker and Kirkpatrick, 2004; Shirley and Walsh, 2001).”
Business groups and their types (2007, background): “Although the business group may be run by competent professional managers, many of the firms are subject to conflicting objectives that detract from achieving superior performance (Vickers & Yarrow, 1988; World Bank, 1995) and lack incentives to improve performance (Hart, 1983), resulting in poor pe”