What Have We Learned about Privatization and Regulatory Reform?
Keywords:
privatization, deregulation, regulatory reform, monopoly regulation, commitment, public policyAbstract
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.Downloads
References
Anderson, M., Cowan, S., & Vickers, J. (1994). Regulatory reform - Economic analysis and British experience. MIT Press.
Armstrong, M., & Vickers, J. (1991). Welfare effects of price discrimination by a regulated monopolist. RAND Journal of Economics, 22(4), 571–580. https://doi.org/10.2307/2600990
Atkinson, S. E., & Halvorsen, R. (1986). The relative efficiency of public and private firms in a regulated environment: The case of U.S. electric utilities. Journal of Public Economics, 29(3), 281–294.
Baron, D. P. (1989). Design of regulatory mechanisms and institutions. In R. Schmalensee & R. D. Willig (Eds.), Handbook of industrial organization. North-Holland. https://doi.org/10.1016/s1573-448x(89)02012-1
Baumol, W. J. (1967). Reasonable rules for rate regulation in an imperfect world. In A. Phillips & O. E. Williamson (Eds.), Prices: Issues in theory, practice, and public policy. University of Pennsylvania Press.
Becker, G. S. (1985). Public policies, pressure groups, and dead weight costs. Journal of Public Economics, 28(3), 329–347. https://doi.org/10.1016/0047-2727(85)90063-5
Beesley, M. E., & Littlechild, S. C. (1989). The regulation of privatized monopolies in the United Kingdom. RAND Journal of Economics, 20(3), 454–472. https://doi.org/10.2307/2555582
Berndt, E., Friedlaender, A. F., Shaw-Er Wang Chiang, J., & Velturo, C. A. (1993). Cost effects of mergers and deregulation in the U.S. rail industry. Journal of Productivity Analysis, 4(1-2), 127–144. https://doi.org/10.1007/978-94-011-2200-9_9
Boardman, A. E., & Vining, A. R. (1989). Ownership and performance in competitive environments: A comparison of the performance of private, mixed, and state-owned enterprises. Journal of Law and Economics, 32(1), 1–34. https://doi.org/10.1086/467167
Boycko, M., Shleifer, A., & Vishny, R. W. (1993a). Property rights, soft budget constraints, and privatization [Mimeo]. Harvard University.
Boycko, M., Shleifer, A., & Vishny, R. W. (1993b). Privatizing Russia. Brookings Papers on Economic Activity, (2), 139–192.
Breautigam, R. R. (1980). An analysis of fully-distributed cost pricing in regulated industries. Bell Journal of Economics, 11(1), 182–196.
Breautigam, R. R., & Panzar, J. C. (1993). Effects of the change from rate-of-return to price cap regulation. American Economic Review, 83(2), 191–198.
Bradley, I., & Price, C. (1988). The economic regulation of private industries by price constraints. Journal of Industrial Economics, 37(1), 99–106. https://doi.org/10.2307/2098555
Brennan, T. J. (1989). Regulating by capping prices. Journal of Regulatory Economics, 1(2), 133–147. https://doi.org/10.1007/bf00140022
Brown, S. J., & Sibley, D. S. (1986). The theory of public utility pricing. Cambridge University Press. https://doi.org/10.1017/cbo9780511666773
Capron, W. M. (Ed.). (1971). Technological change in regulated industries. The Brookings Institution.
Chadwick, E. (1859). Results of different principles of legislation and administration in Europe: Of competition for the field, as compared with competition within the field, of service. Journal of the Royal Statistical Society, Series A, 22(3), 381–402.
Cudahy, R. D. (1993). The coming demise of deregulation. Yale Journal on Regulation, 10(1), 1–15.
Demsetz, H. (1968). Why regulate utilities? Journal of Law and Economics, 11(1), 55–65.
Eckaus, R. S. (1994). The metamorphosis of giants: China and India in transition [Mimeo]. MIT Department of Economics.
Faulhaber, G. R., & Baumol, W. J. (1988). Economists as innovators: Practical products of theoretical research. Journal of Economic Literature, 26(2), 577–600.
Foster, C. D. (1992). Privatization, public ownership, and the regulation of natural monopoly. Blackwell.
Galal, A., & Shirley, M. (Eds.). (1994). Does privatization deliver? World Bank.
Gray, H. M. (1940). The passing of the public utility concept. Journal of Land and Public Utility Economics, 16(1), 8–20. https://doi.org/10.2307/3158751
Jaffe, A. B., & Kantner, D. M. (1990). Market power of local cable television franchises: Evidence from the effects of deregulation. RAND Journal of Economics, 21(2), 226–234. https://doi.org/10.2307/2555420
Jefferson, G. H., & Rawski, T. G. (1994). Enterprise reform in Chinese industry. Journal of Economic Perspectives, 8(2), 47–70.
Joskow, P. L., & Noll, R. G. (1994). Deregulation and regulatory reform during the 1980s. In M. Feldstein (Ed.), American economic policy in the 1980s. University of Chicago Press.
Joskow, P. L., & Rose, N. L. (1989). The effects of economic regulation. In R. Schmalensee & R. D. Willig (Eds.), Handbook of industrial organization. Elsevier. https://doi.org/10.1016/s1573-448x(89)02013-3
Joskow, P. L., & Schmalensee, R. (1986). Incentive regulation for electric utilities. Yale Journal on Regulation, 4(1), 1–49.
Joskow, P. L., Schmalensee, R., & Tsukanova, N. (1994). Competition policy in Russia during and after privatization. Brookings Papers on Economic Activity: Microeconomics, 301–381. https://doi.org/10.2307/2534733
Kikeri, S., Nellis, J., & Shirley, M. (1992). Privatization: The lessons of experience. The World Bank. https://doi.org/10.1596/0-8213-2181-1
Krueger, A. O., & Duncan, R. (1993). The political economy of controls: Complexity (Working Paper N.º 4351). National Bureau of Economic Research.
Laffont, J.-J. (1994). The new economics of regulation ten years after. Econometrica, 62(3), 507–537. https://doi.org/10.2307/2951658
Laffont, J.-J., & Tirole, J. (1993). A theory of incentives in procurement and regulation. MIT Press.
Liston, C. (1993). Price-cap versus rate-of-return regulation. Journal of Regulatory Economics, 5(1), 25–48.
MacAvoy, P. W., & Sloss, J. (1967). Regulation of transport innovation. Random House.
McCubbins, M. D., Noll, R. G., & Weingast, B. R. (1987). Administrative procedures as instruments of political control. Journal of Law, Economics, and Organization, 3(2), 243–277.
Mathios, A. D., & Rogers, R. P. (1989). The impact of alternative forms of state regulation of AT&T on direct-dial, long-distance telephone rates. RAND Journal of Economics, 20(3), 437–453. https://doi.org/10.2307/2555581
Morrison, S. A., & Winston, C. (1986). The economic effects of airline deregulation. The Brookings Institution.
Noll, R. G. (1989). Economic perspectives on the politics of regulation. In R. Schmalensee & R. D. Willig (Eds.), Handbook of industrial organization (Vol. 2). Elsevier. https://doi.org/10.1016/s1573-448x(89)02010-8
Neu, W. (1993). Allocative inefficiency properties of price-cap regulation. Journal of Regulatory Economics, 5(2), 159–182. https://doi.org/10.1007/bf01065364
Paredes-Molina, R. D. (1994). Privatization and regulation in a less developed economy: The Chilean case [Tesis doctoral no publicada]. Department of Economics, University of California, Los Angeles.
Pashigian, B. P. (1976). Consequences and causes of public ownership of urban transit facilities. Journal of Political Economy, 84(6), 1239–1260. https://doi.org/10.1086/260510
Peltzman, S. (1989). The economic theory of regulation after a decade of deregulation. Brookings Papers on Economic Activity: Microeconomics, 1–60. https://doi.org/10.2307/2534719
Phillips, A. (Ed.). (1975). Promoting competition in regulated markets. The Brookings Institution.
Pint, E. M. (1992). Price-cap versus rate-of-return regulation in a stochastic-cost model. RAND Journal of Economics, 23(4), 564–578. https://doi.org/10.2307/2555906
Posner, R. A. (1975). The social costs of monopoly and regulation. Journal of Political Economy, 83(4), 807–827. https://doi.org/10.1086/260357
Sappington, D. E. M., & Sibley, D. S. (1992). Strategic nonlinear pricing under price-cap regulation. RAND Journal of Economics, 23(1), 1–19. https://doi.org/10.2307/2555429
Sappington, D. E. M., & Stiglitz, J. E. (1987). Privatization, information, and incentives. Journal of Policy Analysis and Management, 6(4), 567–582. https://doi.org/10.2307/3323510
Schmalensee, R. (1974). Estimating the costs and benefits of utility regulation. Quarterly Review of Economics and Business, 14, 51–64.
Schmalensee, R. (1979). The control of natural monopolies. D.C. Heath.
Schmalensee, R. (1989). Good regulatory regimes. RAND Journal of Economics, 20(3), 417–436. https://doi.org/10.2307/2555580
Shapiro, C., & Willig, R. D. (1990). Economic rationales for the scope of privatization. In E. N. Suleiman & J. Waterbury (Eds.), The political economy of public sector reform and privatization. Westview.
Shepherd, W. G. (1988). Public enterprise: Criteria and cases. In H. W. de Jong (Ed.), The structure of European industry. Kluwer.
Shleifer, A., & Vishny, R. W. (1993). Corruption. Quarterly Journal of Economics, 108(3), 599–617.
Spulber, D. (1989). Regulation and markets. MIT Press.
Spiller, P. T. (1990). Politicians, interest groups, and regulators: A multiple-principals agency theory of regulation, or 'let them be bribed'. Journal of Law and Economics, 33(1), 65–101. https://doi.org/10.1086/467200
Stigler, G. J. (1971). The theory of economic regulation. Bell Journal of Economics and Management Science, 2(1), 3–21. https://doi.org/10.2307/3003160
Taylor, W. E., & Taylor, L. D. (1993). Postdivestiture long-distance competition in the U.S. American Economic Review, 83(2), 185–190.
Teeples, R., & Glyer, D. (1987). Cost of water delivery systems: Specific and ownership effects. Review of Economics and Statistics, 69(3), 399–408.
Tirole, J. (1991). Privatization in Eastern Europe: Incentives and the economics of transition. In O. Blanchard & S. Fischer (Eds.), NBER Macroeconomics Annual 1991. MIT Press.
Tollison, R. D. (1982). Rent-seeking: A survey. Kyklos, 35(4), 575–602. https://doi.org/10.1111/j.1467-6435.1982.tb00174.x
U.S. Council of Economic Advisers. (1991). Economies in transition around the world. In Economic report of the President, 1991. Government Printing Office.
Vickers, J., & Yarrow, G. (1988). Privatization: An economic analysis. MIT Press.
Vickers, J., & Yarrow, G. (1991). Economic perspectives on privatization. Journal of Economic Perspectives, 5(2), 111–132. https://doi.org/10.1257/jep.5.2.111
Vining, A. R., & Boardman, A. E. (1992). Ownership versus competition: Efficiency in public enterprise. Public Choice, 73(2), 205–239. https://doi.org/10.1007/bf00145092
Vogelsang, I. (1988). Price-cap regulation of telecommunications services: A long-run approach. In M. A. Crew (Ed.), Deregulation and diversification of utilities. Kluwer. https://doi.org/10.1007/978-1-4684-6897-7_3
Williamson, O. E. (1985). The economic institutions of capitalism. Free Press.
Wilson, J. Q. (1980). The politics of regulation. In J. Q. Wilson (Ed.), The politics of regulation. Harvard University Press.
Winston, C. (1993). Economic deregulation: Days of reckoning for microeconomists. Journal of Economic Literature, 31(3), 1263–1289.
World Bank. (1993). Latin America and the Caribbean. World Bank.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 1995 Richard Schmalensee
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Article usage
- ViewsTimes this article's page was opened since the journal started recording statistics. One person can visit more than once.
- 177
- DownloadsTimes the full text of this article (usually the PDF) was opened or downloaded.
- 308
All time, as recorded by the journal.
Last 2 years: 72 views, 203 downloads.
1.74 downloads per view (journal average 1.65).Downloads of the full text for every abstract view of this article, compared with the whole journal.
Explore the journal's metrics
