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The Big Sell: Privatizing East Germany's Economy

Author

Listed:
  • Lukas Mergele
  • Moritz Hennicke
  • Moritz Lubczyk
Abstract
Departing from communism, East Germany witnessed history’s most extensive privatization program. While the program sparked global interest as a blueprint for privatization, its effectiveness remains disputed. Using unique firm-level data, we examine the program’s objective to privatize the most competitive firms. We document that firms with higher baseline productivity are more likely to be privatized, yield higher prices, are more often acquired by West Germans, and are more likely to survive 20 years later. Inspecting the inner workings of the privatization agency, we illustrate challenges and lessons for government interventions attempting to target the right firms to promote policy goals.

Suggested Citation

  • Lukas Mergele & Moritz Hennicke & Moritz Lubczyk, 2020. "The Big Sell: Privatizing East Germany's Economy," CESifo Working Paper Series 8566, CESifo.
    • Handle: RePEc:ces:ceswps:_8566
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Ufuk Akcigit & Harun Alp & André Diegmann & Nicolas Serrano-Velarde, 2023. "Committing to Grow: Privatizations and Firm Dynamics in East Germany," Working Papers 685, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    2. Hager, Anselm & Hennicke, Moritz & Krause, Werner & Mergele, Lukas, 2021. "Privatizations Spark Socialist Backlash: Evidence from East Germany’s Transformation," OSF Preprints cmsyn, Center for Open Science.
    3. Radosevic, Slavo, 2022. "Techno-economic transformation in Eastern Europe and the former Soviet Union – A neo-Schumpeterian perspective," Research Policy, Elsevier, vol. 51(1).
    4. Bondar Mariia & Fuchs-Schündeln Nicola, 2023. "Good Bye Lenin Revisited: East-West Preferences Three Decades after German Reunification," German Economic Review, De Gruyter, vol. 24(1), pages 97-119, February.
    5. Moritz Hennicke & Moritz Lubczyk & Lukas Mergele, 2020. "Die Treuhandanstalt: Eine empirische Bestandsaufnahme 30 Jahre nach der Deutschen Wiedervereinigung," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 73(09), pages 49-52, September.

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    More about this item

    Keywords

    privatization; firm ownership; labor productivity; German reunification;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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