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The reform of network industries, privatisation and consumers’ welfare: evidence from the EU15

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  • Carlo Vittorio FIORIO

    ()

  • Massimo FLORIO

    ()

Abstract

In the past two decades privatisation and liberalisation of network industries providing services of general economic interest (SGEI), have been particularly significant in the European Union. Wide variations around a common policy trend can, however, be observed across countries and sectors. We focus on electricity, gas and telecoms sectors and study the welfare effects of reforms on users using both subjective data on consumers’ perception of utility prices and data on average prices paid. Our empirical findings for EU15 in the three industries we consider, are mixed. Privatisation per se consistently leads to higher consumer prices. There are, however, beneficial effects of market opening reforms, but often smaller and more uncertain than we would have expected. In terms of perceptions, consumers are happier with the price they pay under public ownership while the evidence is mixed for the other reforms. Thus, objective and subjective evidence are broadly mutually consistent, as far as privatisation is concerned. These findings are entirely new and tend to reject the earlier, more optimistic views by the European Commission on the outcomes of the reforms.

Suggested Citation

  • Carlo Vittorio FIORIO & Massimo FLORIO, 2009. "The reform of network industries, privatisation and consumers’ welfare: evidence from the EU15," Departmental Working Papers 2009-41, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  • Handle: RePEc:mil:wpdepa:2009-41
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    File URL: http://wp.demm.unimi.it/files/wp/2009/DEMM-2009_041wp.pdf
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    Cited by:

    1. 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.
    2. Bena Jan & Ondko Peter & Vourvachaki Evangelia, 2011. "Productivity Gains from Services Liberalization in Europe," EERC Working Paper Series 11/15e, EERC Research Network, Russia and CIS.
    3. Fiorio, Carlo V. & Florio, Massimo, 2011. "«Would you say that the price you pay for electricity is fair?» Consumers' satisfaction and utility reforms in the EU15," Energy Economics, Elsevier, vol. 33(2), pages 178-187, March.
    4. repec:eee:juipol:v:50:y:2018:i:c:p:13-25 is not listed on IDEAS
    5. Gugler, Klaus & Rammerstorfer, Margarethe & Schmitt, Stephan, 2013. "Ownership unbundling and investment in electricity markets — A cross country study," Energy Economics, Elsevier, vol. 40(C), pages 702-713.

    More about this item

    Keywords

    Liberalisation; privatisation; consumers’ satisfaction; welfare; electricity; gas; telecoms;

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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