The privatisation of state assets and state commercial companies

Abstract

This paper is meant to offer an outline of some theoretical and empirical considerations affecting privatisation. The emphasis in on the implications of the economics of property rights for the implementation of economic policy. Its main conclusion is that privatisation is, for the most part an unnecessary exercise, and is really only justified in limited circumstances. Most of the advantages associated with privatisation are in fact due to commercialisation and liberalisation. In a competitive environment, the nett efficiency gain from privatisation is likely to be small if it exists at all. The paper outlines reasons for suspecting that some of the motives behind the drive towards privatisation are based on misunderstandings about its end results. "Popular Capitalism", or "solving the national debt problem" turn out to be doubtful starters. Part I contains some comments on the issues - the objectives of privatisation. Part II looks at the basis for the perceived "inefficiency' of public sector production. Part III surveys some empirical and theoretical evidence on the consequences of privatisation and liberalisation. Part IV attempts to draw some conclusions for Ireland.