Estimating the Benefits of Hilmer and Related Reforms

The Industry Commission's 1995 study of the growth and revenue implications of Hilmer and related reforms has been influential in the debate over microeconomic reform. In addition to reform of Telstra, Australia Post, the Federal Airports Corporation, the Civil Aviation Authority, state electricity, gas and water authorities, and rail, road and port authorities, the Commission examined a broad-ranging program including competitive tendering for the provision of public services, deregulation of the building industry and a move to self-regulation of industries such as meat processing. The Commission estimated that the implementation of these reforms would result in a 5.5 per cent increase in GDP. In this paper, the Commission's analysis is subjected to a detailed critique. It is argued that most of the estimated productivity gains are overoptimistic, representing upper bounds to possible achievement rather than likely outcomes. Furthermore, it is argued that the dominant flow-on effects of microeconomic reform will be negative, arising from the fact that at least some of the workers directly displaced by reform will be permanently displaced from the employed labour force.     

构建和谐农村金融市场的思考

目前我国农村金融体制改革已取得一定成效,但未能从开创一个多样化的有序竞争的金融市场着眼,未能与农村经济的改革有机地结合起来,尚难适应农业和农村经济发展的需要.深入分析了农村金融体系存在的问题,指出了目前农村金融体系中的不和谐因素,并对如何构建和谐的农村金融市场提出了几点建议.     

The Efficiency Impact of the Chinese Industrial Reforms in the 1980’s

A stochastic frontier production function is used to estimate the effect of partial and gradual reforms in the 1980’s in each of seven state-owned manufacturing industries. Reform-induced gains in technical efficiency were significant in all sample industries although not always substantial enough to motivate industry-wide productivity growth. The bonus system had speedy and impressive efficiency effects, but there is no consistent evidence on the effectiveness of other reform measures, including greater output autonomy, partial exposure to market influences, and the possibility of dismissals for malfeasance. Equalization of marginal factor returns across firms was observed in some industries, which may be considered as evidence of improved allocative efficiency in response to the reforms.     

The Reform of Local Public Utilities in Italy

The Italian system of local public utilities has recently undergone an important reform process. The first round of reforms, introduced in the 1990s, represented a remarkable change in the social welfare function with regard to the management of local public utilities. The legislation was specifically designed to cut costs and reduce deficits. A second round of reforms, required by European directives, started around the mid-1990s. Several laws were passed introducing important innovations and regulating specific sectors: public transport; electricity; and gas. Article 35 of the 2002 Financial Law was the final step in a comprehensive reform of the whole local public utility sector. The main innovations of the Financial Law concerns liberalization. Article 35 states that the general rule for awarding service provision contracts is competitive tendering; the rationale is obviously that of competition for the market. The general rule as expressed by Article 35 is nevertheless limited during the transition period. In the long run, competitive tendering will become the normal way of awarding contracts for local public utility provision. Even if there are doubts that full competition will be introduced into the sector, liberalization does appear to be having an effect, forcing many local public utilities to become more efficient. The changes introduced have brought about a better and a more efficient system with a greater number of large size enterprises and on the average a more active management.
In the future, the liberalization process may come to a standstill due to an insufficient number of competitors. Strong public administrations are therefore needed to prevent opportunistic behaviour by private firms.     

Competition in the Portuguese economy: insights from a profit elasticity approach

The article uses the elasticity of profits to marginal costs, as in Boone (Econ J 111:1245–1261, 2008b), to measure the degree of competition in the Portuguese economy in a period characterised by the reallocation of resources towards the non-tradable sector and the accumulation of macroeconomic imbalances. Using firm-level data for the period 2000–2009, we find that there is lower competition intensity in the non-tradable sector. The least competitive markets within this sector lay in professional services, network industries and segments of retail trade. We also find that reductions in competition intensity are relatively widespread in the economy, but in terms of sales, gross value added and employment they are more substantial in the non-tradable sector. Results suggest that some network industries and other services exhibit low and a declining competition intensity in the period under analysis. In addition, the article discusses the coherence of the profit elasticity with classic indicators of market power, such as the Herfindahl–Hirschman index and the price-cost margin, and find that in more than half of the markets there is an agreement in the dynamics of competition intensity.     

Evaluating Partial Reforms in the Chinese State Industrial Sector: a stochastic frontier cost function approach

China's phenomenal economic growth since 1979 is seen by many as a challenge to the belief that the clarification of property rights is a necessary step of successful transition from a planned economy to a market economy. Instead of mass and rapid privatization, reforms in the Chinese state industrial sector in the 1980s were attempted to reconstruct the incentive structure of enterprises by linking rewards to performance, expanding managerial freedom and exposing enterprises to market influences. This paper investigates the extent to which the partial reforms have transformed the behaviour and performance of state-owned enterprises (SOEs). Using a panel of observations on 769 SOEs from ten manufacturing industries during 1980 and 1989, a stochastic cost frontier function is estimated to measure the effect of various reform measures on both technical and allocative efficiency. We found that the average cost efficiency level increased by 1.18% per annum during the decade. The efficiency effects of the industrial reform programme are mixed. While performance-related bonuses and market competition appear to have had the intended impact, there is evidence that devolution of decision-making power to the firm level has led to deterioration in efficiency. Therefore, although the partial reforms have met with some success, the issue of an adequate structure of incentives for SOEs remains unresolved.     

Securities Market Macrostructure: Property Rights and the Efficiency of Securities Trading

This article derives securities market macrostructure from microstructuralfoundations under a variety of assumptions regarding propertyrights. Because liquidity effectively makes securities tradinga network industry, intermediaries can exercise market powerby restricting access to the trading mechanism. Fragmentation,cream skimming, and free riding reduce the inefficiency thatresults from this market power, but welfare would be improvedfurther by requiring open access to all trading venues. Implementingopen access in practice must confront a trade-off between reducingmarket power and potentially impairing the incentives of theoperators of trading systems to reduce cost and improve quality.Other network industries, notably telecoms and electricity transmission,have faced similar dilemmas, and the path to the creation ofa more efficient property rights structure in financial marketscould benefit from the experiences of other network markets.     

Market Power and Welfare in Electricity Markets Employing Tradable Green Certificate Systems

Within the last 25 years, liberalization (deregulation) of electricity markets around the world has been undertaken with the goal of replacing long-standing monopoly rights with fully competitive markets. In addition, many nations have begun employing “tradable green certificate” systems to promote electricity generation from renewable (“green”) energy sources (wind, solar, biomass, hydroelectric, etc.), with the primary objective of mitigation of greenhouse gas emissions from fossil fuel (“black”) producers. In this paper, we examine some welfare implications of the use of green certificate systems in electricity markets under alternative market structures. We demonstrate that under a wide variety of scenarios, an oligopolistic market structure may perform better in terms of welfare than a competitive market structure. We also demonstrate that there will typically be an optimal level of market power summarized by a conjectural variations parameter that depends on the cost structure of both green and black firms. Our model provides insights into the policy challenge of electricity market design and suggests an approach that could be applied in a more general model.     

Labour Market Regulations and the Sectoral Reallocation of Workers: The Case of Trade Reforms

In this paper I highlight the importance of incorporating the institutional features of local labour markets into the analysis of trade reforms. A trade reform is often deemed beneficial because the elimination of trade barriers allows labour to reallocate towards those sectors in the economy in which the country has a comparative advantage. The amount and speed of the reallocation, however, and the post-reform behaviour of output, productivity and welfare, will depend on how regulated the labour market is. First, I document that high firing costs slow down the intersectoral reallocation of labour after a trade reform. Second, in order to isolate the effect of firing costs on labour reallocation, output and welfare after a trade reform, I build a dynamic general equilibrium model. I find that if a country does not liberalize its labour market at the outset of its trade reform, the intersectoral reallocation of workers will be 30% slower, and as much as 30% of the gains in real output and labour productivity in the years following the trade reform will be lost. From a policy standpoint, the message is that while trade reforms are desirable, they need to be complemented by labour market reforms in order to be fully successful.     

Welfare‐improving Coordinated Tariff and Sales Tax Reforms under Imperfect Competition

This paper studies the welfare effects of coordinated domestic sales tax reform associated with a reduction of the import tariff under imperfect competition. We set up a simple oligopoly trading model where domestic and exporting firms compete in the home market. We show that, if the initial levels of import tariff and sales tax are positive, there always exist welfare‐improving sales tax reforms. In some cases, a reduction of the sales tax accompanied by a reduction of the import tariff increases social welfare, whereas in other cases, raising the sales tax can increase social welfare.     

The Impact of Competition and Trade Unions on Workplace Reform and Organisational and Technological Change

This article addresses two research questions, firstly to test the hypothesis that organisational and technological changes are more likely to occur in the traded goods sector, in the private sector relative to the public sector and in more competitive product markets. Secondly, to examine whether trade unions have a positive or negative effect on the implementation of different types of workplace reforms, and organisational and technological changes. The analysis supports the hypothesis that workplaces in the traded goods sector are more likely to implement organisational and technological changes. It also indicates that workplaces in the private sector are more likely to implement certain types of reforms, whereas workplaces in the public sector are more likely to implement others. However, this study does not provide conclusive evidence that competitive pressure in product markets increases the probability that a firm will implement each workplace reform mentioned in this study. The evidence on unions provides tentative support to the view that more unionised workplaces are less likely to implement the reforms in question.     

Product Market Reform and Innovation in the EU*

European Union countries have implemented widespread reforms to product markets to stimulate competition, innovation, and economic growth. We provide empirical evidence that the reforms carried out under the EU Single Market Programme (SMP) were associated with increased product market competition, as measured by a reduction in average profitability, and with a subsequent increase in innovation intensity and productivity growth for manufacturing sectors. Our analysis exploits exogenous variation in the expected impact of the SMP across countries and industries to identify the effects of reforms on average profitability, and the effects of profitability on innovation and productivity growth.     

Libéralisation des Services publics de réseau et jeux croisés de la régulation: le cas de l'électricité

This article analyses the liberalization of public services with a special focus on the (re)regulation process that is induced. Firstly, a conceptual framework is developed in order to identify the constitutive elements of the public regulation related to market competition, public service obligations, operators and public property, as well as the tension between them. Secondly, a comparative study describes the liberalization and the regulatory design of the electricity sector in England, France, Germany, Norway and Switzerland. As a conclusion, we note the necessity to further analyse the introduction of market mechanisms into formerly monopolistic network industries and its effects.     

ASSESSING THE INTEGRATION OF ELECTRICITY MARKETS USING PRINCIPAL COMPONENT ANALYSIS: NETWORK AND MARKET STRUCTURE EFFECTS

Market power in electricity wholesale spot markets is more likely if there is market segmentation. We show that principal component analysis is a natural tool for the qualitative and quantitative assessment of the presence of local markets. We study whether the New Zealand market has been a national market or a set of local markets since its inception in 1996 and find that increased competition induced some segmentation that was eliminated by transmission enhancement and the introduction of generation downstream from the constrained circuits. Transmission investment policy that ensures one market will contribute to the efficiency of electricity, water, and related other markets. ( JEL D4, L1, L4)     

The electricity market game

This paper examines the effects of imperfect competition in unregulated electricity markets from a general equilibrium perspective, and demonstrates that horizontal market power can explain both the large peak-period price spikes observed recently in California and elsewhere, and the marked reduction in addition to capacity that have also occurred during the transition to competitive markets.     

Bank competition, financial reform, and institutions: The importance of being developed

In this paper, I estimate the degree of market power at the bank-level for 84 banking systems worldwide. Subsequently, I analyze the sources of bank competition, placing emphasis on the impact of financial reform and the quality of institutions. I find that financial liberalization policies reduce the market power of banks in developed countries with advanced institutions. In contrast, banking competition does not improve at the same pace in countries with weaker institutions and a lower level of institutional development. The results hold across a wide array of identification tests and estimation methods. The main policy implication to be drawn is that a certain level of institutional development is a precondition for the success of reforms aimed at enhancing the competition and efficiency of banking markets.     

Competition in gas markets

This paper discusses some of the current regulatory issues that arise in gas markets under perfect or imperfect competition. It first presents a benchmark model of gas transportation pricing, when all markets are competitive. Optimal prices and capacities are characterized both without and with a break-even constraint for the transportation operator. Elaborating on this framework, it then studies the appropriate dimensioning of the transportation network when an otherwise unregulated supplier exerts market power. Specifically, it points to the possibility of building up “excess” transmission capacity in order to mitigate local market power.     

专利联盟与技术标准的一体化分析——基于公共产品提供的视角

从公共产品的私人提供角度阐述了高技术产业中出现专利联盟与技术标准的一体化现象.在高技术产业中政府或公共组织没有能力无偿提供技术标准,而只能借助私人来提供.而专利联盟是私人提供作为公共产品的技术标准的一种有效的方式,技术的复杂化、市场的全球化、以及技术标准的竞争性也促使专利联盟的方式被更多地采用.专利联盟与技术标准的一体化,给高技术产业的发展带来深刻的影响,它表现为专利联盟的常态化、产业竞争的阵营化、产业分工的层级化、以及层级和技术路径的锁定.在发展高技术产业时应格外注重技术标准的建立及标准间的竞争,鼓励国内企业和科研机构积极利用专利联盟争取竞争优势,同时应认清产业的发展阶段、竞争格局及自身的状况,避免盲目地追求不可能的层级跨越或技术路径的突破.     

Effective monitoring and mitigation in the organized wholesale electric power markets

The organized wholesale electric power markets in the United States are characterized by structural market power, and would not produce competitive results absent administrative intervention. Market power mitigation is a fundamental and permanent part of the market design for the organized wholesale electricity markets. Market power mitigation is essential to FERC’s policy of relying on competition to regulate electric wholesale power prices, consistent with its mandate under the Federal Power Act. Controversy has arisen about how to ensure that the markets clear on the basis of offers that have been determined to be competitive. Specifically, the issue is what institution and function is best situated to provide the initial critical determination about whether a participant’s offer is competitive. Despite recent clarification of FERC policies on the market monitoring function, the roles of market administrators and market monitors are a potential source of confusion and counterproductive institutional conflict. The FERC should refine and clarify its policy in this area by according exclusive responsibility to institutional, independent market monitors to monitor participants’ conduct and the potential for the exercise of market power through ex ante review of cost-based offers used in market power mitigation, subject to review by FERC.     

REGULATORY REFORM: LESSONS FOR NATURAL GAS PIPELINES

This article examines regulatory reform and some possible consequences of reform designed to increase the role that competition plays in the interstate natural gas pipeline industry. The analysis first provides a conceptual framework for viewing the "problem of natural monopoly" as a basis for regulation. It summarizes ways in which introducing competition for a market may be possible even if competition within a market is not possible–through competitive auctions, monopolistic competition, or contestability. The analysis then relates briefly to this framework the experiences of three U.S. industries that have undergone substantial reform during recent years–airlines, motor carriers, and railroads. Finally, it compares the natural gas pipeline industry with the others examined and suggests types of regulatory reform that might succeed–and those that might not succeed–in improving resource allocation.