Papers on privatization: Transitory joint ventures, strategic alliances and contract breach and the impact of government legislation.

摘要

My dissertation focuses on the privatization of firms and economic liberalization programs. In the first of three papers, I examine joint ventures as a possible method to privatize state owned enterprises. I propose that joint ventures can be used as transitory organizations by governments to aid in the process of privatization and determine when it is optimal for a government to do so. I build a theoretical model and show that the problem is alleviated if the government converts the state owned enterprise into a joint venture with the potential buyer. I show that a transitory joint venture is an optimal way to achieve privatization if agency costs are high and if a high proportion of state owned enterprises up for privatization are of relatively low quality.;In my second paper, I study a strategic alliance that was formed between Enron Corporation and the State Electricity Board (SEB) of Maharashtra, India, which after six months was breached by the SEB. The paper builds a formal model of the standard remedies that were proposed after the contract was breached and assesses how well each remedy performs in terms of compensating the breached party.;My-third paper, co-written with Gary S. Fields and Kaushik Basu, addresses strict labor guidelines about workers and retrenchment. The paper builds a theoretical model to analyze one such anti-retrenchment labor law in India and considers the legislative changes proposed to it during the initial stages of the country's economic liberalization program. We first build a model and show the conditions under which an anti-retrenchment law raises wages and conditions under which it lowers wages. The model is then used to demonstrate a paradoxical result: As s, the amount of severance payment stipulated by the government, rises, starting from zero, equilibrium wages fall (as expected). However beyond a certain point, further rises in s cause wages to rise. In other words, the relation between the exogenously specified cost to the firm of dismissing a worker and the equilibrium wage that prevails on the market is V-shaped.