This text gives an analysis of privatization and restructuring by the Treuhandanstalt in East Germany. It also addresses the theoretical and conceptual problems of large-scale privatization in the transformation process. Contrary to many transition economies, the East German privatization approach was based on the sale of state-owned companies to strategic investors under the constraint of a mixed set of allocative criteria, including employment and investment objectives. In order to achieve these objectives, the Treuhandanstalt frequently granted huge subsidies to private investors. This...