What Have We Learned about Privatization and Regulatory Reform?

Abstract

In the 1970s, economists generally advocated deregulation under competitive conditions but had little to say about privatization or methods of monopoly regulation. Largely reflecting innovations in all these policy areas, economists have generally raised their estimates of the benefits of privatization, deregulation, and reform of monopoly regulation. Logically and empirically, however, the economic implications of these reforms depend importantly on the political and institutional context. This essay considers what recent experience has taught us about the effects of privatization and regulatory reform, stressing the roles of information and commitment, and discusses implications of those lessons for research and policy analysis.