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Privatization: Successes and Failures resources

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xviii FOREWORD 13. See Stiglitz (2006). 14. For instance, many constitutions (such as Mexico’s) do not allow the sale of a country’s national resources; others (such as Bolivia’s) allow the sale of certain re- sources only after ratifi cation by the legislature. In the case of Bolivia, questions were raised about whether certain privatizations/concessions conformed to this constitu- tional provision. 15. The recognition of the impossibility of complete contracts—and the conse- quences of this—is one of the important advances of modern economic theory. 16. Elsewhere, I have written at length concerning the defi ciencies of these agree- ments. See Stiglitz (forthcoming). 17. See, e.g., Shleifer and Vishny (1999). 18. See Hoff and Stiglitz (2004, forthcoming). The disappointments with the privatizations in Rus sia and elsewhere in the economies in transition has led to a large literature trying to explain the factors that contribute to a successful transition and a successful privatization. Godoy and Stiglitz (2007) argue that privatization played a far less important role than did the underlying institutional reforms. Stiglitz (2000a) argues, in par tic u lar, that the lack of good corporate governance meant that there were greater incentives for asset stripping and wealth creation; while Hoff and Stiglitz (2004, forthcoming) argue that the way privatization was conducted actually undermined the creation of a rule of law. R E F E R E N C E S Arrow, K. and G. Debreu. 1954. “Existence of an Equilibrium for a Competitive Economy.” Econometrica 22(3): 265–290. Berle, A. A. and G. C. Means. 1932. The Modern Corporation and Private Property. New York: Macmillan. Edlin, A. and J. E. Stiglitz. 1995. “Discouraging Rivals: Managerial Rent- Seeking and Economic Ineffi American Economic Review 85(5): 1301–1312. ciencies.” Ellerman, D. and J. E. Stiglitz. 2001. “Not Poles Apart: ‘Whither Reform?’ and ‘Whence Reform?’ ” The Journal of Policy Reform 4(4): 325–338. Godoy, S. and J. E. Stiglitz. 2007. “Growth, Initial Conditions, Law and Speed of Privatization in Transition Countries: 11 Years Later.” In Transition and Beyond: Essays in Honour of Mario Nuti, ed. S. Estrin, G. W. Kolodko, and M. Uvalic´, 89–117. Hampshire, En gland: Palgrave Macmillan. Greenwald, B. and J. E. Stiglitz. 1986. “Externalities in Economies with Imperfect Information and Incomplete Markets.” Quarterly Journal of Economics 101(2): 229–264. Grossman, S. and O. Hart. 1979. “A Theory of Competitive Equilibrium in Stock Market Economies.” Econometrica 47(2): 293–329. ——. 1980. “Takeover Bids, the Free-Rider Problem and the Theory of the Corpora- tion.” Bell Journal of Economics 11(1): 42–64. Grossman, S. and J. E. Stiglitz. 1977. “On Value Maximization and Alternative Ob- jectives of the Firm.” Journal of Finance 32(2): 389–402. ——. 1980. “Stockholder Unanimity in the Making of Production and Financial Decisions.” Quarterly Journal of Economics 94(3): 543–566.

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