The Impact of Public Ownership and Competition on Productivity

Abstract

Are private firms more efficient than public ones? Does privatisation improve performance? In order to answer these questions, it is necessary to disentangle the impact of ownership and competition upon business performance. This paper presents empirical evidence relating to the hypothesis that public ownership and competition are determinants of firms' productivity. It concludes that public ownership has a significant negative effect on productivity and also that privatisation has a positive impact on efficiency. Furthermore, increased competition is found to have a positive effect on productivity. These results are interpreted as confirming that privatisation is effective as a means of increasing firms' efficiency, at least in a non-regulated and relatively competitive sector, such as manufacturing. Copyright 2005 Blackwell Publishing Ltd..

Privatisation, State Ownership and Productivity: Evidence from China

“…The productivity effect dominates however, and is negative, suggesting that it is the less productive firms that are taken back into public ownership. It is a widely reported result that total factor productivity for publicly owned firms is below that of their private counterparts (Gonzalez-Paramo and Hernandez De Cos, 2005), and we, in line with previous work such as Jefferson et al (2000), Jefferson and Su (2006) extend this argument by finding that it is the more productive firms tend to be those that are privatised. The results presented here extend this even further, and to the best of our knowledge is the first evidence that the firms move into public ownership in China are those with below average productivity.…”

Outsourcing Public Services: Ownership, Competition, Quality and Contracting

“…25 Lindqvist (2008) finds that the total cost of residential youth care is twice as high in private facilities compared with in-house 23 See e.g. Bartel and Harrison (2005), González-Páramo and Hernández Cos (2005), and Okten and Arin (2006). 24 Using the same data set, Ohlsson (1996) also finds that input prices (of garbage trucks) paid by private firms are 10-15 percent lower than the input prices paid by local governments.…”

Red Capitalists: Political Connections and Firm Performance in China

“…By contrast, increased competition is widely believed to have a positive impact on firm performance (e.g. González‐Páramo and De Cos, 2005). On the other hand, the finance‐growth nexus is well researched in the economic literature (Levine, 2005, and Du and Girma, 2007).…”