Prague Economic Papers 2002, 11(3):269-279 | DOI: 10.18267/j.pep.198

Privatizing a service sector: where to start?

Jacek Cukrowski
University of Finance and Management (WSFiZ), Ciepla 40, 15-472 Bialystok (Poland) and Center for Social and Economic Research (CASE), Sienkiewicza 12, 00-944 Warsaw (Poland).

This paper develops a theoretical framework for the analysis of transformation of the service sector during privatization process. A simple model which includes a supplier of services and retail firms is presented and applied to study the effects of various sequences of privatization. Our findings indicate that privatizing the supplier first is always at least as good as privatizing the retailers first because (unlike the strategy of privatizing the retail firms first) it increases both the number of retail firms and profit of the supplier.

Keywords: privatization, service sector, demand uncertainty, trade in services, retail market
JEL classification: D73

Published: January 1, 2002  Show citation

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Cukrowski, J. (2002). Privatizing a service sector: where to start? Prague Economic Papers, 11(3), 269-279. doi: 10.18267/j.pep.198
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