Great Divestiture

The privatisation carried out under the Thatcher and Major governments in Britain has been widely (although not universally) considered a success, and has greatly influenced the privatisation of state industries in the transition economies of Eastern Europe. Massimo Florio's systematic analysis is the first comprehensive treatment of the overall welfare impact of this broad national policy of divestiture. Using the tools of social cost-benefit analysis, Florio assesses the effect of privatisation on consumers, taxpayers, firms, shareholders and workers.

His conclusion may be surprising to some; his findings suggest that the changeover to private ownership per se had little effect on long-term trends in prices and productivity in Britain and contributed to regressive redistribution. After historical and theoretical overviews of privatisation and a look at macroeconomic trends in the Thatcher-Major era, Florio considers in detail the microeconomic effects of British privatisation on several key groups. In successive chapters, he examines firms and productivity changes; shareholders' windfall gains and evidence of underpricing and outperformance in privatised companies; workers, manag