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Privatization, Deregulation, and Capital Accumulation

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Author Info
Gerhard Glomm () (Department of Economics, Indiana University, Wylie Hall, Room 105, Bloomington, IN 47405, USA)
Fabio Mendez () (Department of Economics, Walton College of Business, Room 402, University of Arkansas, Fayetteville, AR 72701, USA;)

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Abstract

In this paper, we study how the privatization and deregulation of intermediate goods industries influence capital accumulation. Our model is solved under three alternative scenarios: (i) the intermediate sector is composed of a public monopoly under government control; (ii) the intermediate sector is dominated by a private monopoly; and (iii) the intermediate sector is competitive. The comparison of these models suggests that the income benefits of state-tomarket transitions are mostly due to increased competition on the deregulated market and that the privatization of state enterprises is not likely to generate significant changes in the economy when the public monopoly is replaced by a private monopoly. We find that elimination of monopoly rights can increase aggregate income significantly.

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Publisher Info
Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 75 (2009)
Issue (Month): 4 (April)
Pages: 976-995
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Handle: RePEc:sej:ancoec:v:75:4:y:2009:p:976-995

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Find related papers by JEL classification:
E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Boundaries of Public and Private Enterprise; Privatization; Contracting Out

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This page was last updated on 2009-12-3.


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