Journal Article

Infrastructure and Public Utilities Privatization in Developing Countries

Emmanuelle Auriol and Pierre M. Picard

in The World Bank Economic Review

Volume 23, issue 1, pages 77-100
Published in print February 2009 | ISSN: 0258-6770
Published online November 2008 | e-ISSN: 1564-698X | DOI: http://dx.doi.org/10.1093/wber/lhn014
Infrastructure and Public Utilities Privatization in Developing Countries

More Like This

Show all results sharing these subjects:

  • Information, Knowledge, and Uncertainy
  • National Government Expenditures and Related Policies
  • Nonprofit Organizations and Public Enterprise
  • Antitrust Issues and Policies
  • Regulation and Industrial Policy
  • Economic Development

GO

Show Summary Details

Preview

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.

Keywords: D82; H54; L33; L43; L51; O10

Journal Article.  8961 words.  Illustrated.

Subjects: Information, Knowledge, and Uncertainy ; National Government Expenditures and Related Policies ; Nonprofit Organizations and Public Enterprise ; Antitrust Issues and Policies ; Regulation and Industrial Policy ; Economic Development

Full text: subscription required

How to subscribe Recommend to my Librarian

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content.