Are governments bad entrepreneurs? On productivity and public ownership in Central European post-Communist countries

Abstract

Although Central European post-communist countries have considerably liberalized energy sectors, privatizations have been poorly implemented establishing legal monopolies and retaining governments' pervasive influence. This study examines the effects of state ownership on productivity and Lerner indices, using a dataset on Central European firms, operating in industries of general interest, from 2009 to 2017. This study contributes to the literature by estimating production functions of energy companies, establishing a link between government ownership, and productivity and Lerner indices, applying continuous measures of state ownership, and evaluating impacts across quantiles. The overall results highlight that state ownership is associated with significant productivity losses, which increase over quantiles, and lower market power.