Threatening to Increase Productivity: Evidence from Brazil's Oil Industry
Summary The wave of privatization in the 1980s and 1990s increased productivity of many previously state owned enterprises (SOEs). However, governments often do not have sufficient support to privatize SOEs. We provide evidence that threatening privatization and market competition (entry of new firms) can increase the productivity of SOEs, even though privatization and entry of new firms does not occur. We study productivity at Brazil's state-owned oil company Petrobras. Petrobras's total factor productivity increased sharply after it lost its legal monopoly, doubling in 6Â years. These large gains occurred despite the fact that Petrobras faced no immediate de facto competition. The threat of competition and privatization was sufficient to generate large productivity gains. These findings suggest that changing the competitive environment can be a powerful force for improving productivity at state-owned firms.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- James A. Schmitz & Arilton Teixeira, 2004.
"Privatization's impact on private productivity: the case of Brazilian iron ore,"
337, Federal Reserve Bank of Minneapolis.
- James A. Schmitz, Jr. & Arilton Teixeira, 2008. "Privatization's Impact on Private Productivity: The Case of Brazilian Iron Ore," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 745-760, October.
- Dale W. Jorgenson & Kevin J. Stiroh, 2000.
"Raising the Speed Limit: US Economic Growth in the Information Age,"
OECD Economics Department Working Papers
261, OECD Publishing.
- Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: U.S. Economic Growth in the Information Age," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(1), pages 125-236.
- Mirta N.S. Bugarin & Roberto Ellery Jr & Victor Gomes & Arilton Teixeira, 2002. "The Brazilian Depression in the 1980s and 1990s," Computing in Economics and Finance 2002 338, Society for Computational Economics.
- Libecap, Gary D & Wiggins, Steven N, 1985. "The Influence of Private Contractual Failure on Regulation: The Case of Oil Field Unitization," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 690-714, August.
- Austan Goolsbee & Chad Syverson, 2008.
"How Do Incumbents Respond to the Threat of Entry? Evidence from the Major Airlines,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 123(4), pages 1611-1633.
- Austan Goolsbee & Chad Syverson, 2004. "How Do Incumbents Respond to the Threat of Entry? Evidence from the Major Airlines," Working Papers 04-04, NET Institute, revised Dec 2004.
- Austan Goolsbee & Chad Syverson, 2005. "How do Incumbents Respond to the Threat of Entry? Evidence from the Major Airlines," NBER Working Papers 11072, National Bureau of Economic Research, Inc.
- Harold L. Cole & Lee E. Ohanian & Alvaro Riascos & James A. Schmitz, 2006.
"Latin America in the rearview mirror,"
Federal Reserve Bank of Minneapolis, issue Sep.
- Harold L. Cole & Lee E. Ohanian & Alvaro Riascos & James A. Schmitz, 2004. "Latin America in the rearview mirror," Staff Report 351, Federal Reserve Bank of Minneapolis.
- Harold L. Cole & Lee E. Ohanian & Alvaro Riascos & James A. Schmitz, Jr., 2004. "Latin America in the Rearview Mirror," NBER Working Papers 11008, National Bureau of Economic Research, Inc.
- Garcia, Patricio & Knights, Peter F. & Tilton, John E., 2001. "Labor productivity and comparative advantage in mining:: the copper industry in Chile," Resources Policy, Elsevier, vol. 27(2), pages 97-105, June.
- Mirta N. S. Bugarin & Roberto Ellery Jr. & Victor Gomes & Arilton Teixeira, 2005. "From Miracle to Disaster: the Brazilian Economy in the Last 3 Decades," DEGIT Conference Papers c010_009, DEGIT, Dynamics, Economic Growth, and International Trade.
- Bartel, Ann P. & Harrison, Ann E., 2000.
"Ownership versus environment : disentangling the sources of public sector inefficiency,"
Policy Research Working Paper Series
2272, The World Bank.
- Ann P. Bartel & Ann E. Harrison, 2005. "Ownership Versus Environment: Disentangling the Sources of Public-Sector Inefficiency," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 135-147, February.
- James A. Schmitz Jr., 2005.
"What Determines Productivity? Lessons from the Dramatic Recovery of the U.S. and Canadian Iron Ore Industries Following Their Early 1980s Crisis,"
Journal of Political Economy,
University of Chicago Press, vol. 113(3), pages 582-625, June.
- James A. Schmitz, 2005. "What determines productivity? lessons from the dramatic recovery of the U.S. and Canadian iron-ore industries following their early 1980s crisis," Staff Report 286, Federal Reserve Bank of Minneapolis.
- George S Olley & Ariel Pakes, 1992.
"The Dynamics Of Productivity In The Telecommunications Equipment Industry,"
92-2, Center for Economic Studies, U.S. Census Bureau.
- Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-97, November.
- G. Steven Olley & Ariel Pakes, 1992. "The Dynamics of Productivity in the Telecommunications Equipment Industry," NBER Working Papers 3977, National Bureau of Economic Research, Inc.
- José E. Galdón-Sánchez & James A. Schmitz Jr., 2002.
"Competitive Pressure and Labor Productivity: World Iron-Ore Markets in the 1980's,"
American Economic Review,
American Economic Association, vol. 92(4), pages 1222-1235, September.
- Jose E. Galdon Sanchez & James A. Schmitz, 2003. "Competitive pressure and labor productivity: world iron ore markets in the 1980s," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 9-23.
- M.A. Adelman and G. Campbell Watkins, 2004. "Costs of Aggregate Hydrocarbon Reserve Additions," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 37-52.
- Stephen L. Parente & Edward C. Prescott, 1997.
"Monopoly rights: a barrier to riches,"
236, Federal Reserve Bank of Minneapolis.
- Bresnahan, Timothy F & Reiss, Peter C, 1991.
"Entry and Competition in Concentrated Markets,"
Journal of Political Economy,
University of Chicago Press, vol. 99(5), pages 977-1009, October.
- John Laitner, 1982. "Monopoly and Long-Run Capital Accumulation," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 143-157, Spring.
When requesting a correction, please mention this item's handle: RePEc:eee:wdevel:v:39:y:2011:i:8:p:1372-1385. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.