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Disentangling liberalization and privatization policies: Is there a political trade-off?

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  • Belloc, Filippo
  • Nicita, Antonio
  • Sepe, Simone M.

Abstract

We empirically investigate the political determinants of liberalization and privatization policies in six network industries of 30 OECD countries (1975–2007). We unbundle liberalization and privatization reforms and study their simultaneous determination in a two-equation model. Unlike previous studies, we account for cross-effects between the two pro-market measures. Our findings unveil that both right-wing and left-wing governments implement liberalizations and privatizations, showing a common trend under the so-called neo-liberalism wave. However, although the privatization rate is higher than liberalization in right-wing environments, the opposite occurs under left-wing governments. We argue that ideological cleavages still affect pro-market reforms, particularly the combination of privatization and liberalization policies. We conclude that different deregulation patterns should be expected under governments characterized by different political ideologies. Our results shed new light on the literature investigating the political-economic rationale underpinning pro-market choices.

Suggested Citation

  • Belloc, Filippo & Nicita, Antonio & Sepe, Simone M., 2014. "Disentangling liberalization and privatization policies: Is there a political trade-off?," Journal of Comparative Economics, Elsevier, vol. 42(4), pages 1033-1051.
  • Handle: RePEc:eee:jcecon:v:42:y:2014:i:4:p:1033-1051
    DOI: 10.1016/j.jce.2013.11.003
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    Cited by:

    1. Francesco Vona & Francesco Nicolli, 2013. "Energy market liberalisation and renewable energy policies in OECD countries," Working Papers hal-00973070, HAL.
    2. Potrafke, Niklas, 2017. "Partisan politics: The empirical evidence from OECD panel studies," Journal of Comparative Economics, Elsevier, vol. 45(4), pages 712-750.
    3. Reischmann, Markus, 2016. "Creative accounting and electoral motives: Evidence from OECD countries," Journal of Comparative Economics, Elsevier, vol. 44(2), pages 243-257.
    4. Dilla, Diana, 2017. "Staatsverschuldung und Verschuldungsmentalität
      [Public Debt and Debt Mentality]
      ," MPRA Paper 79432, University Library of Munich, Germany.
    5. Björn Kauder & Benjamin Larin & Niklas Potrafke, 2014. "Was bringt uns die große Koalition? Perspektiven der Wirtschaftspolitik," ifo Working Paper Series 172, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    6. repec:eee:poleco:v:48:y:2017:i:c:p:180-197 is not listed on IDEAS
    7. Kauder Björn & Larin Benjamin & Potrafke Niklas, 2014. "Was bringt uns die große Koalition?," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 15(1), pages 88-101, February.
    8. Mira Fischer & Björn Kauder & Niklas Potrafke & Heinrich W. Ursprung, 2016. "Support for free-market policies and reforms: Does the field of study influence students’ political attitudes?," ifo Working Paper Series 218, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.

    More about this item

    Keywords

    Liberalization; Privatization; Network industries; Partisanship;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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