In this paper we consider various privatisation mechanisms in a general equilibrium model. We show that privatisation has no real effects, if the public sector is efficient and lump-sum taxes are implemented. The free distribution of public assets is financially neutral, whereas the sale of public assets is not. If taxes are not available, there is a privatisation mix allowing the economy to reach the first best. The maintain of some public property rights is justified, even if the public efficiency is removed.
Financial market development privatisation public good provision public sector inefficiency risk diversification