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Backhaus, Jürgen G. --- "Structures of Public Enterprise" [2005] ELECD 145; in Backhaus, G. Jürgen (ed), "The Elgar Companion to Law and Economics, Second Edition" (Edward Elgar Publishing, 2005)

Book Title: The Elgar Companion to Law and Economics, Second Edition

Editor(s): Backhaus, G. Jürgen

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781845420321

Section: Chapter 21

Section Title: Structures of Public Enterprise

Author(s): Backhaus, Jürgen G.

Number of pages: 16

Extract:

21 Structures of public enterprise
Jürgen G. Backhaus


One of the most fascinating developments in law and economics analysis is
the possibility of subjecting public institutions to a scrutiny that allows an
assessment of their performance. This entry first gives an introduction to the
basic approach and then details a law and economics-based performance
analytic approach of public institutions such as public enterprises.

Introduction
As a consequence of the collapse of state socialism in Central and Eastern
Europe, many countries found themselves with a large set of publicly owned
entities which often imposed a considerable burden on the public budget.
Hence governments designed different programmes to privatize these entities
(which often could hardly be referred to as enterprises as they tended to
display traits of bureaucracies) or at least to make them independent of public
support. However, this task proved to be very difficult. For instance, the
performance of the authority charged in Germany with the privatization of
the state socialist industry inherited from the defunct German Democratic
Republic gives a mixed picture of what could be accomplished under the
most favourable of circumstances. As Table 21.1 indicates, out of a total of
almost 14 000 enterprises in East Germany, a mere 354 remained to be
privatized in the autumn of 1994. But all the assets had been sold for a trifling

Table 21.1 The Treuhand legacy

East German enterprises taken over 13 781
Number still to be privatized* 354
Enterprises in liquidation 3701
Private investment ...