Privatising Public Property as a Tool of Economic Policy: Theoretical Premises for Discussing Private versus Public Ownership

The positive impact of an effective competition regime on innovative activities and economic growth is well established in empirical terms. Effective competition requires that enterprises are not restricted in their economic activities. Enterprises need to be privately owned in order to enjoy full economic freedom. In a market economy, private property thus is considered the "standard" whereas public property is the exception that needs to be justified. Private ownership is the prerequisite for market-economic competition; privatising public property fuels competition and may act as a driver of innovation and economic growth. According to economic theory, state intervention (by way of the state owning enterprises) is justified in a market economy only when there is a market failure and such intervention is able to repair this failure.