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The Political Economy of Public Enterprises

The project in brief:

The aim of the project is to use empirical methods to validate the characteristics and determinants of public enterprises in Germany based on well-founded theoretical considerations. In addition to the theoretical and methodological considerations, it is also important to collect and process suitable data.

Why public enterprises?

Public enterprises, such as energy and water supply or waste management companies, find themselves in the tension between public administration and public interest, but also political decision-makers. This concerns the decision for or against a hive-off, the structuring of the desired framework (e.g. the choice of legal form) or the choice of control and participation, for example in supervisory boards and shareholders' meetings. At the same time, public enterprises are important for the functioning provision of goods and services, which are indispensable for the general public.

Theoretical approaches

The tension between management of public enterprises, politics and the citizens's needs requires dealing with the institutional setting, i.e. building on approaches from (new) institutional economics. How big is the institutionalized control? Do the specifics of public enterprises lead to increased transaction costs? Are there asymmetries in the information available on success and failure?

In particular, due to the influence of political actors, their actions, i.e. incentives and interests, must also be considered in the context of political economy. The focus is on voters, their elected representatives (politicians) and administration. Are there incentives for politicians to behave opportunistically and how does this affect the decisions and finances of public enterprises? Do the incentives and actions differ depending on the period under consideration?


Various determinants ​​for the success and decisions of public enterprises can be analyzed on the basis of annual financial statement data Political indicators and detailed information on framework conditions are collected, processed and merged.


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