Nationalizations and effciency

Ernesto Crivelli () and Klaas Staal

Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: We develop a theoretical model in which ?rms are either private or state-owned. When ?rms become insolvent, the government can intervene with general measures, like subsidies, or by nationalizing ?rms. The government only intervenes when the bankruptcy of a ?rm entails social costs. In a stylized model, we analyze how government interventions a?ect allocative and productive efficiency. Nationalization of private ?rms in case unpro?table investments were made, leads to increased allocative efficiency despite private ownership. The effort level chosen by the managers working for ?rms is also affected by government intervention with an impact on productive efficiency.

Keywords: nationalization; efficiency (search for similar items in EconPapers)
JEL-codes: L33 P31 P51 (search for similar items in EconPapers)
Date: 2009-07
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Journal Article: Nationalizations and Efficiency (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:trf:wpaper:268

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