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We show that privatization can be beneficial even if the government is rational and benevolent, and if the firm's economic and informational environment is independent of the governance structure. The model assumes that wage contracts between the firm's owner (government or private entrepreneur)...
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the family. This theory of separation of ownership from management includes the Anglo-Saxon and the Continental European …
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, while the most able managers obtain a wage increase, less able managers are faced with a reduction in wages. Hence our model …
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