Voucher privatization

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Privatization voucher used in Czechoslovakia

Voucher privatization is a privatization method where citizens are given or can inexpensively buy a book of vouchers that represent potential shares in any state-owned company. Voucher privatization has mainly been used in the early to mid-1990s in the transition economies of Central and Eastern Europe - countries such as Russia, Poland, Bulgaria, Slovenia and Czechoslovakia.

A way in which vouchers are used for partial privatization is the government requiring taxpayers to pay for a service whether they use it or not and allowing them to choose their service provider. Each citizen is given vouchers allowing them to use that service (or a certain amount of it) at government expense. Examples include education vouchers and shadow tolling. A disadvantage of this type of system, relative to full privatization, is that there is no incentive for citizens to seek to reduce the cost of the service they use below the voucher amount.[clarification needed]

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