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Privatization and liberalization in vertically linked markets

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  • Stähler, Frank
  • Traub, Stefan

Abstract

State-owned enterprises (SOEs) are often vertically integrated firms which operate in key industries like transport, telecommunication and power generation. They provide an infrastructure and invest in its quality. We discuss the effects of liberalization and their privatization which can be complete or partial such that upstream production is still run by an SOE. We show that granting a downstream rival access to the infrastructure of a vertically integrated private firm is welfare improving in most cases even if a holdup problem exists. For any vertically separated structure we find that privatization through multi-product firms welfare dominates privatization through single-product firms. -- Öffentliche Unternehmen (SOEs) sind häufig als vertikal integrierte Unternehmen in bedeutenden Industrien wie Transportwesen, Telekommunikation und Stromversorgung tätig. Sie stellen eine Infrastruktur bereit und investieren in deren Qualität. Wir diskutieren die Effekte von Liberalisierung und Privatisierung, wobei die Privatisierung vollständig oder nur partiell vorgenommen werden kann, so dass die vorgelagerte Produktionsstufe weiterhin durch ein SOE betrieben wird. Wir zeigen, dass es die Wohlfahrt steigernd ist, wenn auf der nachgelagerten Stufe Konkurrenten eines privatisierten vertikal integrierten Unternehmen der Zugriff auf die Infrastruktur gestattet wird. Dies gilt in den meisten Fällen auch trotz eines Holdup-Problems für den Betreiber der Infrastruktur. Im Falle vertikaler Trennung ergibt sich, dass die Privatisierung in Mehr-Produkt-Unternehmen der Privatisierung in Ein-Produkt-Unternehmen wohlfahrtsmäßig überlegen ist.

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Bibliographic Info

Paper provided by University of Bremen, Collaborative Research Center 597: Transformations of the State in its series TranState Working Papers with number 95.

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Date of creation: 2009
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Handle: RePEc:zbw:sfb597:95

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Keywords: Privatization; vertical integration; state-owned enterprises;

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References

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  1. Ngo Van Long & Frank Stähler, 2009. "Trade policy and mixed enterprises," Canadian Journal of Economics, Canadian Economics Association, vol. 42(2), pages 590-614, May.
  2. Andrei Shleifer, 1998. "State Versus Private Ownership," NBER Working Papers 6665, National Bureau of Economic Research, Inc.
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  8. Newbery, D., 1996. "Privatisation and Liberalisation of Network Utilities," Cambridge Working Papers in Economics 9620, Faculty of Economics, University of Cambridge.
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  10. Giacomo Calzolari & Carlo Scarpa, 2009. "Footloose Monopolies: Regulating a "National Champion"," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(4), pages 1179-1214, December.
  11. Boardman, Anthony E & Vining, Aidan 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, University of Chicago Press, vol. 32(1), pages 1-33, April.
  12. Jeffry M. Netter & William L. Megginson, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June.
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