Conclusion
In this paper I have shown that a purely economic theory of nationalization and privatization is conceivable, on the basis of an analysis of government as a rationally discriminating operator acting as the agent of pressure groups competing for redistribution.
Variations in cost of capital differentials between private investors and the state (essentially due to the existence of taxation) explain alternate policies of taking over privately owned corporations and divesting from state enterprises (SOEs).
Some initial empirical results are encouraging. Consequently I cannot reject the hypothesis that, through nationalization and privatization episodes, politicians, after all, do behave according to economic rationality.
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Previous versions of this paper have been presented at Simon Fraser University (Spring 1986), AFFI annual meeting (December 1986), International Seminar on Privatization (Tunis, April 1987), OECD Development Center (May 1989), and have been accepted for presentation at the meeting of the European Public Choice Society (Konstanz, 1990), and the CIRIEC conference (Liège, 1991).
My thanks go to Michel Picot, Violaine Monod and Olivier Colson for excellent research assistance, to John Chant, Steve Easton, Isaac Ehrlich, Ronald Jones and Zane Spindler for helpful suggestions, to two anonymous referees of theRevue Finance where a part of this work has been published, and to a referee to this Journal for very useful criticism.
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Rosa, JJ. Nationalization, privatization, and the allocation of financial property rights. Public Choice 75, 317–337 (1993). https://doi.org/10.1007/BF01053442
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DOI: https://doi.org/10.1007/BF01053442