Opportunistic privatization

In this seminar, Dr Uberti will argue that, in the run-up to elections, self-interested politicians use privatisation opportunistically to buy votes and increase their probability of re-election. When state-owned firms are privatised, politicians can use subsidies to persuade the new managers to pursue inefficient strategies that bring political benefits to them. Under plausible assumptions, politicians have a strict preference for privatisation over state ownership in the run-up to elections. Privatisation sales and revenues increase significantly in pre-election periods. The firms privatised before elections are sold at a lower price, and exhibit higher costs after privatisation, than otherwise similar firms. These firms also have a higher probability of bankruptcy; and, conditional on surviving, they display lower profitability than other similar firms. We test these predictions using a unique dataset covering the full population of former socially owned enterprises in Serbia. We report several findings consistent with our theory (joint work with Vladan Ivanovic and Drini Imami).

About the speaker

Luca J. Uberti is a post-doctoral researcher in the Department of Economics and Management (DEM) at the University of Luxembourg. Prior to joining DEM, Luca was Alexander Nash Fellow at SSEES. His research interests are in political economy, comparative and institutional economics, and the economics of culture. His previous work has examined the causes and consequences of corruption and gender roles, amongst others. His most recent publications have appeared in the Journal of Comparative Economics and the Journal of Population Economics. 

Image credit: Mary Pahlke from Pixabay