LESSONS FROM PRIVATIZATION IN BRITAIN - STATE ENTERPRISE BEHAVIOR, PUBLIC CHOICE, AND CORPORATE GOVERNANCE

The process of privatizing most of Britain's major public enterprises yields interesting conclusions on the three related issues: (1) A problem of policy assignment arose in the use of privatization and liberalization to achieve both allocative and productive efficiency. (2) Evidence on the behavior of the public enterprises is consistent with an organizational model of the relevant principal-agent relationships predicting certain types of slack absorption. (3) The privatization process entailed policy choices that bear on their future productive efficiency (effectiveness of monitoring by the market for corporate control) and allocative efficiency (provision for regulation). © 1990.