| How do firm characteristics determine the order in which firms are privatized? I examine this question in three related essays. The first essay examines optimal sequencing strategies when governments use privatization to pursue economic and political objectives. Predictions from this analysis are then tested using data from the large-scale privatization program in the Czech Republic. The second essay uses a sequential auction model to investigate the particular question of how a government with private information about firm prospects can sequence privatization to maximize revenues. Consistent with empirical evidence, the model shows that better firms should be sold first. The third essay investigates the general question of whether an informed seller with two goods to be sold sequentially will sell the higher quality good first, and provides an alternative explanation for the declining price anomaly observed in auction data. The model shows that while selling the better good first, is the more incentive compatible strategy, under some conditions saving the best good for last can generate higher revenues for the seller. |
