| Abstract: | It is argued that the owner of production rights may not be indifferent across organizational structures of producers. In particular, the owner may prefer to grant some or all of the rights to labor-managed firms. The reason is that such firms adopt a less competitive strategy and so generate more industry rent, which the owner can capture as fee payments. A mixed duopoly may be particularly attractive. The conflict between revenue-raising and the pursuit of efficiency as objectives of government privatization programs is highlighted, and the relevance to East European reform discussed. |
