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Regulation by Public Options : Evidence from Pension Funds

Author

Listed:
  • Pablo Blanchard

    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)

  • Sebastián Fleitas

    (Pontificia Universidad Católica de Chile)

  • Rodrigo González Valdenegro

    (Charles River Associates)

Abstract

We study the equilibrium welfare effects of using state-owned enterprises (SOEs) to discipline market power. We estimate a dynamic equilibrium model of Uruguay’s individual capitalization pension system, where a high-quality SOE competes with private firms in the presence of worker inertia. We find that the presence of a SOE lowers equilibrium fees and increases investment returns. Replacing it with a private firm would more than double its fee and raise private firms’ fees by 8 percent. Reducing inertia mitigates but does not offset privatization. Comparing policy instruments, we show that direct price regulation yields higher welfare gains than competition through an SOE.

Suggested Citation

  • Pablo Blanchard & Sebastián Fleitas & Rodrigo González Valdenegro, 2026. "Regulation by Public Options : Evidence from Pension Funds," Documentos de Trabajo (working papers) 03-26, Instituto de Economía - IECON.
    • Handle: RePEc:ulr:wpaper:dt-03-26
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    File URL: https://hdl.handle.net/20.500.12008/53529
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • N2 - Economic History - - Financial Markets and Institutions
    • H4 - Public Economics - - Publicly Provided Goods
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

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