Privatization of State Enterprises : A Cost Benefit Decision Model Applied to Poland

The privatization drive in transiting economies is modeled along approaches of cost benefit analysis (CBA), seen from buyers and sellers. The buyer's price depends on the discounted present value of future sales, additional investment costs, and desirability of meeting competitive returns. The seller's price is based on government's calculations of gains and losses from the privatization. Buyer's offers are set against the sellers; and the gaps between the two are evaluated for different sectors. The model is applied to Poland. Empirical results show how privatization in selected sectors ranks in attractiveness to buyer and seller. Parameters of buyer and seller are re-simulated with the objective of closing gaps and facilitating agreement between buyer and seller