Government ownership may dominate private ownership under government failure. Such dominance disappears as product markets grow mature, giving rise to the need for privatization. Buyers' limited wealth imposes a constraint on how and when privatization takes place. In particular, firms may be...

China's remarkable economic growth occurred despite (1) the lack of secure property rights; and (2) government ownership of most non-state firms such as township-village enterprises. We unravel these two puzzles with a theory of ownership of firms facing state predation. We distinguish and...

This paper investigates how, government ownership can better enhance entrepreneurs' incentives to invest than private ownership. Bureaucracy creates opportunities for governments to extort entrepreneurs, as entrepreneurs make transfer payments to these governments in order to steer through...