Infrastructure and Public Utilities Privatization in Developing Countries

Should governments in developing countries promote private ownership and deregulated prices in noncompetitive sectors? Or should they run publicly owned firms and regulate prices at the expense of rents to insiders? A theoretical model is used to answer these normative questions. The analysis focuse...

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Main Authors:	Auriol, Emmanuelle, Picard, Pierre M.
Format:	Journal Article
Published:	World Bank 2012
Subjects:	asymmetric information budget constraints consumer surplus consumers debt development economics duopoly econometrics economies of scale gdp industrial economics marginal costs monopolies monopoly natural monopolies opportunity cost opportunity costs perfect information price increases profitability
Online Access:	http://hdl.handle.net/10986/4495

id	okr-10986-4495
recordtype	oai_dc
spelling	okr-10986-44952021-04-23T14:02:18Z Infrastructure and Public Utilities Privatization in Developing Countries Auriol, Emmanuelle Picard, Pierre M. asymmetric information budget constraints consumer surplus consumers debt development economics duopoly econometrics economies of scale gdp industrial economics marginal costs monopolies monopoly natural monopolies opportunity cost opportunity costs perfect information price increases profitability Should governments in developing countries promote private ownership and deregulated prices in noncompetitive sectors? Or should they run publicly owned firms and regulate prices at the expense of rents to insiders? A theoretical model is used to answer these normative questions. The analysis focuses on the tradeoff between fiscal benefits and consumer surplus during privatization of noncompetitive sectors. Privatization transfers control rights to private interests and eliminates public subsidies, yielding benefits to taxpayers at the cost of increased prices for consumers. In developing countries, where budget constraints are tight, privatization and price liberalization may be optimal for low profitability industries but suboptimal for more profitable industries. And once a market has room for more than one firm, governments may prefer to regulate the industry. Without a credible regulatory agency, regulation is achieved through public ownership. 2012-03-30T07:12:37Z 2012-03-30T07:12:37Z 2009-02-28 Journal Article World Bank Economic Review 1564-698X http://hdl.handle.net/10986/4495 CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank World Bank Journal Article Latin America Peru Honduras Puerto Rico Burkina Faso Argentina
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
topic	asymmetric information budget constraints consumer surplus consumers debt development economics duopoly econometrics economies of scale gdp industrial economics marginal costs monopolies monopoly natural monopolies opportunity cost opportunity costs perfect information price increases profitability
spellingShingle	asymmetric information budget constraints consumer surplus consumers debt development economics duopoly econometrics economies of scale gdp industrial economics marginal costs monopolies monopoly natural monopolies opportunity cost opportunity costs perfect information price increases profitability Auriol, Emmanuelle Picard, Pierre M. Infrastructure and Public Utilities Privatization in Developing Countries
geographic_facet	Latin America Peru Honduras Puerto Rico Burkina Faso Argentina
description	Should governments in developing countries promote private ownership and deregulated prices in noncompetitive sectors? Or should they run publicly owned firms and regulate prices at the expense of rents to insiders? A theoretical model is used to answer these normative questions. The analysis focuses on the tradeoff between fiscal benefits and consumer surplus during privatization of noncompetitive sectors. Privatization transfers control rights to private interests and eliminates public subsidies, yielding benefits to taxpayers at the cost of increased prices for consumers. In developing countries, where budget constraints are tight, privatization and price liberalization may be optimal for low profitability industries but suboptimal for more profitable industries. And once a market has room for more than one firm, governments may prefer to regulate the industry. Without a credible regulatory agency, regulation is achieved through public ownership.
format	Journal Article
author	Auriol, Emmanuelle Picard, Pierre M.
author_facet	Auriol, Emmanuelle Picard, Pierre M.
author_sort	Auriol, Emmanuelle
title	Infrastructure and Public Utilities Privatization in Developing Countries
title_short	Infrastructure and Public Utilities Privatization in Developing Countries
title_full	Infrastructure and Public Utilities Privatization in Developing Countries
title_fullStr	Infrastructure and Public Utilities Privatization in Developing Countries
title_full_unstemmed	Infrastructure and Public Utilities Privatization in Developing Countries
title_sort	infrastructure and public utilities privatization in developing countries
publisher	World Bank
publishDate	2012
url	http://hdl.handle.net/10986/4495
_version_	1764391612456108032

Infrastructure and Public Utilities Privatization in Developing Countries

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