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One more ride on the merry-go-round! Public ownership and delayed competition in local public services

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  • Marzano, Riccardo

Abstract

This paper investigates the effect of public ownership on the use of competitive bidding to award local monopoly franchises. The empirical setting is provided by the Italian natural gas liberalization reform, which made competitive bidding to award gas distribution franchises at the municipality level compulsory. The paper shows that municipalities owning a capital share in a gas distribution network operator experience a reduction in the hazard of awarding. The paper provides additional tests to support the causal interpretation of the findings. First, the credibility of competitive procedures is tested. Second, the presence of a contemporaneous dependence structure in the data is taken into account to address the imitation effect among the municipalities served by the same operator.

Suggested Citation

  • Marzano, Riccardo, 2015. "One more ride on the merry-go-round! Public ownership and delayed competition in local public services," Journal of Comparative Economics, Elsevier, vol. 43(4), pages 981-996.
    • Handle: RePEc:eee:jcecon:v:43:y:2015:i:4:p:981-996
    DOI: 10.1016/j.jce.2015.03.004
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    More about this item

    Keywords

    Public ownership; Competitive bidding; Regulation; Local governments;
    All these keywords.

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L97 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Utilities: General

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