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We make a first step towards a positive theory of privatization, in a framework similar to the one of Shleifer and Vishny's "Politicians and Firms" (QJE, 1994). In our model, a government may want to privatize because privatization can provide managers with stronger incentives to exert effort, and more managerial effort may help to maintain jobs that otherwise would be destroyed. However, the government trades off better managerial incentives with the costs of losing control, here, over funds that the government provides for the restructuring of firms. We also show that if managers care for the size of their firm, privatization may weaken, not strengthen incentives.JEL Classification: D23, L33, P31

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IntroductionThe implementation and development of Information and Communication Technologies (ICT) in the education sector have been posing a challenge to the traditional learning environment by introducing new educational tools, including eLearning. In the framework of the 'eLearning Action Plan' of the European Commission terminology, the notion of eLearning refers to 'the use of new multimedia technologies and the Internet to improve the quality of Learning by facilitating access to resources and services as well as remote exchanges and collaboration'. It encompasses four different strands which must be integrated into a comprehensive policy: (i) infrastructure and equipment; (ii) high-quality educational multimedia services and content; (iii) training services and facilities for teachers and for lifelong learning; and (iv) dialogue and cooperation at all levels.Four principal rationales have been identif fied to support the introduction of ICT in education: (i) social, based on the recognition of the role played by technology in society, the need for education to ref flect the concerns of society and to demystify technology for pupils/students; (ii) vocational, driven by the requisite of ensuring that the system is preparing students for jobs which require skills in technology; (iii) pedagogical, linked to the fact that technology will assist the teaching learning process through better communication and higher quality material and hence enhance the teaching of traditional subjects; and (iv) catalytic, through external effects on society by improving the cost-effectiveness of the delivery of educational services; on the education system by reshaping the power relationships between teachers and learners and by facilitating the transmission of knowledge and the acquisition of skills for disadvantaged communities.In recent years, boosted by the development of ICT, a largely uncritical consensus emerged amongst policy-makers about the potential benef fits of new information and communication instruments in education. As an illustration, in the US, a web-based education commission (www.webcommission.org) emphasised the awe-inspiring power of the Internet to transform the educational experience and to meet the education challenges of the information age. In the EU, in addition to the various national policies supporting the introduction of ICT into the educational system, the European Commission was implementing different measures to accelerate the changes in the education and training systems for the move to a Knowledge-based economy in parallel with various policies, e.g. concerning the telecommunication industry. The potentialities of ICT in education have also been considered for developing countries through various initiatives supported by OECD, UNESCO and the World Bank.The implementation of a comprehensive eLearning strategy should integrate three stages: Infrastructure, Content and Teacher Training. The introduction and wide dissemination of ICT in schools and universities require substantial investment in ...