Efficiency losses from tax distortions vs. government control

Given the strong theoretical presumption that state enterprises are less ef ficient than private enterprises, why have countries often chosen state own ership? This paper explores the hypothesis that high tax rates can distort the decisions of private enterprises by enough that state ownership becomes preferable on efficiency grounds. The forecast is that state ownership sho uld be seen primarily in settings with high (explicit or implicit) tax dist ortions to private behavior.