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Public Policy Towards the Sale of State Assets in Troubled Times: Lessons from the Irish Experience

Author

Listed:
  • Gorecki, Paul K.
  • Lyons, Seán
  • Tol, Richard S. J.
Abstract
Governments throughout the western world and beyond are in the midst of a severe financial crisis and emerging from a sharp recession. Ireland is no exception. One of the options for strengthening public finances is the sale of state assets. In this paper we draw on the Irish experience to inform the wider debate on this important issue. Debate over the potential saleability of certain tangible and intangible assets owned by the state turns into much more than an exercise in ranking these assets by commercial viability and value. Careful attention needs to be devoted to ensuring that wider public policy considerations are taken into account, such competition, regulation and economic development. Hence it is important to formulate terms of reference for any consideration of the sale of state assets that reflect these wider concerns. In the case of tangible assets ? commercial state firms ? the debate is around whether these firms should be the public sector and whether the objectives can be better met by alternative arrangements. In privatising these state-owned firms careful attention needs to be paid to ensure that markets are well organised and competitive. This may necessitate for example breaking up a vertically integrated firm into its competitive and monopoly parts. To a considerable degree the debate over privatisation reflects issues related to the regulatory reform agenda. But in both cases what is on offer is a more efficient and competitive economy if reform is conducted sensibly and is not derailed by vested interests as has been the case, on occasion, in the past. In terms of intangible assets such as permits of various kinds such a those relating to carbon, wind turbine and oil exploration as well as radio spectrum licences, the conclusion is much more straightforward: these assets should be auctioned off to the highest bidder, but using a carefully designed auction which needs to take into account the competitive situation amongst the bidders not only to prevent collusion and gaming, but also to encourage entry and competition. Another important reason to auction these assets is that there is a danger, absent auctioning, that government will be unaware that these are valuable assets and hence not properly price them when making public policy decisions.

Suggested Citation

  • Gorecki, Paul K. & Lyons, Seán & Tol, Richard S. J., 2010. "Public Policy Towards the Sale of State Assets in Troubled Times: Lessons from the Irish Experience," Papers WP356, Economic and Social Research Institute (ESRI).
    • Handle: RePEc:esr:wpaper:wp356
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    References listed on IDEAS

    as
    1. Paul Gorecki, 2011. "Do you believe in magic? Improving the quality of pharmacy services through restricting entry and aspirational contracts, the Irish experience," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 12(6), pages 521-531, December.
    2. AfDB AfDB, 2011. "MDG Report 2011 - Full Report," MDG Report 334, African Development Bank.
    3. Brick, Aoife & Layte, Richard, 2009. "Recent Trends in the Caesarean Section Rate in Ireland 1999-2006," Papers WP309, Economic and Social Research Institute (ESRI).
    4. Tuohy, Aidan & Bazilian, Morgan & Doherty, Ronan & Gallachóir, Brian Ó & O'Malley, Mark, 2009. "Burning peat in Ireland: An electricity market dispatch perspective," Energy Policy, Elsevier, vol. 37(8), pages 3035-3042, August.
    5. Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73(2), pages 110-110.
    6. Ken Binmore & Paul Klemperer, 2002. "The Biggest Auction Ever: the Sale of the British 3G Telecom Licences," Economic Journal, Royal Economic Society, vol. 112(478), pages 74-96, March.
    7. Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73(4), pages 351-351.
    8. Paul Klemperer, 2004. "Auctions: Theory and Practice," Online economics textbooks, SUNY-Oswego, Department of Economics, number auction1.
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Towards a private ESB
      by Richard Tol in The Irish Economy on 2011-09-14 20:39:54

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    Cited by:

    1. Palcic, Dónal & Reeves, Eoin, 2013. "Private equity leveraged buyouts in European telecoms: The case of Eircom," Telecommunications Policy, Elsevier, vol. 37(6), pages 573-582.
    2. McGrath, Luke & Hynes, Stephen & McHale, John, 2019. "Augmenting the World Bank's estimates: Ireland's genuine savings through boom and bust," Ecological Economics, Elsevier, vol. 165(C), pages 1-1.
    3. Gorecki, Paul K., 2011. "The Internal EU Electricity Market: Implications for Ireland," Research Series, Economic and Social Research Institute (ESRI), number RS23.
    4. McGrath, Luke & Hynes , Stephen, 2020. "Approaches to accounting for our natural capital: Applications across Ireland," Working Papers 309501, National University of Ireland, Galway, Socio-Economic Marine Research Unit.
    5. Paul K. Gorecki, 2011. "Economic Regulation: Recentralisation of Power or Improved Quality of Regulation?," The Economic and Social Review, Economic and Social Studies, vol. 42(2), pages 177-211.

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    More about this item

    Keywords

    privatisation/regulation/competition/tangible assets/intangible assets/Ireland/intangible state assets/tangible state assets/recession/Ireland/Policy/competition/regulation;

    JEL classification:

    • H27 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other Sources of Revenue
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises

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