Does vertical separation reduce cost? An empirical analysis of the rail industry in European and East Asian OECD Countries

The main purpose of this study is to analyze structural separation policies, especially vertical (i.e. operation-infrastructure) and horizontal (i.e. passenger-freight service) separation. Using the total cost function of a railway organization, we evaluate whether or not vertical separation and/or horizontal separation can reduce costs. For this analysis, we selected 30 railway organizations in 23 European and East Asian OECD countries over 14?years, from 1994 to 2007. Our findings show that horizontal separation reduces railway cost. As for vertical separation, effects change according to the train density of a railway organization. With lower train density, vertical separation tends to reduce cost, while with higher train density vertical separation increases cost.     

Determinants of privatization of public corporations: evidence from the Japanese experience

The main purpose of this study is to find factors affecting privatization decisions. This study investigates the determinants of privatization by applying the probit model for a data set of special public corporations in Japan. In December 2001, the Japanese government made a resolution to consider the privatization of special public corporations, evaluating 74 special public corporations for possible privatization. In the empirical analysis on the determinants of privatization, we find that among several factors affecting privatization decisions, two are important—the market condition factor and the policy/regulation factor. As for market conditions, a public corporation which exists in a commercialized industry is about 20% more likely to be privatized than others. As for the policy and regulation factor, the public corporation’s privatization under a single regulator is about 25% more likely, compared with the public corporation’s privatization under multiple regulators.     

Structural reform of the electricity industry and economic growth

Using 782 panel data from 34 OECD countries from 1991 to 2013, this study aims to evaluate how structural reform affects GDP growth rate. We use the Barro-type GDP growth rate regression model and apply both fixed and random effect models. Eight structural reform variables are selected: (i) third party access, (ii) wholesale market dummy, (iii) choice of supplier, (iv) private ownership, (v) generation-others separation, (vi) transmission-others separation, (vii) distribution-others separation and (viii) overall vertical separation. Major finding results are as follows: (i) third party access can positively contribute to GDP growth rate, (ii) wholesale market and overall vertical separation might have a small negative effect, and (iii) other variables have no significant effect.     

The Post Office vs. Parcel Delivery Companies: Competition Effects on Costs and Productivity

The main purpose of this study is to evaluate whether the competition factor affects cost reduction or TFP growth, even when ownership is maintained by the public sector. For empirical investigation, we selected the parcel delivery market in Japan. Formerly monopolized by the Post Office, the parcel delivery market was dramatically affected by the entry of the privately owned Yamato in 1976, an event which saw the share of the Post Office begin its decline to only 14.9% by 1998. In this study, we estimate the total cost function of goods transported by using a pooled data set, and the hedonic specification of output is formulated in order to consider output characteristics. Our conclusion is that competition has contributed to cost reduction and TFP growth in the case of private companies but not in the case of the Post Office.