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Privatization and liberalization in vertically linked markets

  • Stähler, Frank
  • Traub, Stefan

State-owned enterprises (SOEs) are often vertically integrated firms which operate in key industries like transport, telecommunication and power generation. They provide an infrastructure and invest in its quality. We discuss the effects of liberalization and their privatization which can be complete or partial such that upstream production is still run by an SOE. We show that granting a downstream rival access to the infrastructure of a vertically integrated private firm is welfare improving in most cases even if a holdup problem exists. For any vertically separated structure we find that privatization through multi-product firms welfare dominates privatization through single-product firms.

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Paper provided by University of Bremen, Collaborative Research Center 597: Transformations of the State in its series TranState Working Papers with number 95.

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Date of creation: 2009
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Handle: RePEc:zbw:sfb597:95
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  1. Nicholas Economides, 1994. "Quality Choice and Vertical Integration," Working Papers 94-22, New York University, Leonard N. Stern School of Business, Department of Economics.
  2. Barbara J. Spencer & James A. Brander, 1983. "International R&D Rivalry and Industrial Strategy," NBER Working Papers 1192, National Bureau of Economic Research, Inc.
  3. Antonio Estache & Andrea Goldstein & Russell Pittman, 2001. "Privatization and Regulatory Reform in Brazil: The Case of Freight Railways," Journal of Industry, Competition and Trade, Springer, vol. 1(2), pages 203-235, June.
  4. White, Mark D., 1996. "Mixed oligopoly, privatization and subsidization," Economics Letters, Elsevier, vol. 53(2), pages 189-195, November.
  5. Joyce Sadka & Jose L. Negrin, 2004. "Full vs. Light-Handed Regulation of a Network Industry," Working Papers 0403, Centro de Investigacion Economica, ITAM.
  6. Groves, Theodore, et al, 1994. "Autonomy and Incentives in Chinese State Enterprises," The Quarterly Journal of Economics, MIT Press, vol. 109(1), pages 183-209, February.
  7. Boardman, Anthony E & Vining, Aidan R, 1989. "Ownership and Performance in Competitive Environments: A Comparison of the Performance of Private, Mixed, and State-Owned Enterprises," Journal of Law and Economics, University of Chicago Press, vol. 32(1), pages 1-33, April.
  8. isamu matsukawa, 2005. "Congestion pricing of inputs in vertically related markets," Industrial Organization 0506012, EconWPA.
  9. Andrei Shleifer, 1998. "State Versus Private Ownership," NBER Working Papers 6665, National Bureau of Economic Research, Inc.
  10. Groves, Theodore & Yongmiao Hong & John McMillan & Barry Naughton, 1995. "China's Evolving Managerial Labor Market," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 873-92, August.
  11. Newbery, D., 1996. "Privatisation and Liberalisation of Network Utilities," Cambridge Working Papers in Economics 9620, Faculty of Economics, University of Cambridge.
  12. Ngo Van Long & Frank Stähler, 2009. "Trade policy and mixed enterprises," Canadian Journal of Economics, Canadian Economics Association, vol. 42(2), pages 590-614, May.
  13. Ehrlich, Isaac & Georges Gallais-Hamonno & Zhiqiang Liu & Randall Lutter, 1994. "Productivity Growth and Firm Ownership: An Analytical and Empirical Investigation," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 1006-38, October.
  14. 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.
  15. Giacomo Calzolari & Carlo Scarpa, 2009. "Footloose Monopolies: Regulating a "National Champion"," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(4), pages 1179-1214, December.
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