Privatization, unbundling, and liberalization of network industries:a discussion of the dominant policy paradigm in the EU
AbstractIn this paper we examine the emergence over the last two decades in the EU of a dominant policy paradigm on the reform of network industries. We consider the broad recommendations by the OECD and the European Commission, and the Directives adopted by the European Union on the reform of some public services, such as electricity, gas, and telecom. These recommendations, in their strongest form, advocate the divestiture of public ownership (openly by the OECD, but not by the EC), unbundling (by both organizations, but with differences across sectors), liberalization (again by both organization, but with variations in the role of market regulation). We contrast the predictions and prescriptions of the paradigm, with a theoretical discussion of the welfare impact of the reforms. This discussion, based on a review of some standard microeconomic assumptions on the role of ownership, economies of scale and scope, governance, and market forms, shows that the dominant policy paradigm oversimplifies a very complex story. We suggest that the actual success of the reform is conditional to a large number of economic and institutional factors, and that it is far from obvious that the adoption of the same policy pattern in any and all the EU countries is always welfare improving. Empirical analysis does not support the paradigm.
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Bibliographic InfoPaper provided by Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano in its series Departmental Working Papers with number 2009-09.
Date of creation: 23 Mar 2009
Date of revision:
Privatization; unbundling; liberalization; network industries;
Find related papers by JEL classification:
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-06-17 (All new papers)
- NEP-COM-2009-06-17 (Industrial Competition)
- NEP-ENE-2009-06-17 (Energy Economics)
- NEP-NET-2009-06-17 (Network Economics)
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- Judith Clifton & Daniel Díaz‐Fuentes & Marcos Fernández‐Gutiérrez & Julio Revuelta, 2011.
"Is Market‐Oriented Reform Producing A ‘Two‐Track’ Europe? Evidence From Electricity And Telecommunications,"
Annals of Public and Cooperative Economics,
Wiley Blackwell, vol. 82(4), pages 495-513, December.
- Clifton, Judith & Díaz-Fuentes, Daniel & Fernández Gutiérrez, Marcos & Revuelta, Julio, 2011. "Is Market-Oriented Reform Producing a “Two-Track” Europe? Evidence from Electricity and Telecommunications," MPRA Paper 33018, University Library of Munich, Germany.
- Mildred E. Warner, 2012. "Does Local Government Size Matter? Privatization and Hybrid Systems of Local Service Delivery," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1212, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
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