competition between telecommunications operators abstract many observers of the telecommunications industry predict that regulation will soon give way to competition policy the paper analyzes unregulated network competition both in the mature and the transition phase of the industry it considers competition in linear or nonlinear prices for customers and also considers both nondiscriminatory pricing and termination based discriminatory pricing the paper investigates whether freely negotiated access charges are compatible with effective competition in the mature phase of the industry and do not erect barriers to entry in the transition towards competition last it analyzes the meaning and impact of the efficient component pricing rule in the context of network competition

privatisation in developing countries a review of the evidence and the policy lessons privatisation is widely promoted as a means of improving economic performance in developing countries however the policy remains controversial and the relative roles of ownership and other structural changes such as competition and regulation in promoting economic performance remain uncertain this article reviews the main empirical evidence on the impact of privatisation on economic performance in developing economies the evidence suggests that if privatisation is to improve performance over the longer term it needs to be complemented by policies that promote competition and effective state regulation and that privatisation works best in developing countries when it is integrated into a broader process of structural reform

internal capital markets and the competition for corporate resources this article examines the role of corporate headquarters in allocating scarce resources to competing projects in an internal capital market unlike a bank headquarters has control rights that enable it to engage in winner picking the practice of actively shifting funds from one project to another by doing a good job in the winner picking dimension headquarters can create value even when it cannot help at all to relax overall firm wide credit constraints the model implies that internal capital markets may sometimes function more efficiently when headquarters oversees a small and focused set of projects this article analyzes the process by which internal capital markets channel limited resources to different uses inside a company in so doing it seeks to address two related sets of questions first what is the fundamental economic rationale for creating an internal capital market that is under what circumstances can it make sense to combine several technologically distinct projects under one roof and have them seek funding from corporate headquarters as opposed to setting them up as stand alone companies that each raise external financing on their own second given this rationale what is the optimal size and scope of an internal capital market should headquarters be involved in funding a large number of projects or just a few and should these projects be unrelated to one another or in similar lines of business the answers to both sets of questions flow from the insight that in a credit constrained setting where not all positive npv projects can be financed headquarters can create value by actively reallocating scarce funds across projects for example the cash flow generated by one division s activities may be taken and spent on investment in another division where the returns are higher or alternatively one division s assets may be used as collateral to raise financing that is then diverted to the other division simply put individual projects must compete for the scarce funds and headquarters job is to pick the winners and losers in this competition

infrastructure and development a critical appraisal of the macro level literature this survey reviews the existing macro level empirical literature on the link between infrastructure and development outcomes in a critical light after providing a general framework that casts the relevant terms of the controversy on the real effect of infrastructure on growth in the context of an aggregate production function it signals what are the relevant empirical questions to be addressed this guides the systematic review of a number of empirical studies and the discussion of the main econometric challenges to the identification of the effect of infrastructure on output and productivity finally building on related research in particular in contract theory and political economy the paper spells out several promising research avenues

residual state ownership policy stability and financial performance following strategic decisions by privatizing telecoms we question previous research assuming that privatizing firm performance generally benefits from decreasing state ownership and the passage of time both of which purportedly align principal agent incentives promoting organizational decision making that increases shareholder value when state ownership shifts from majority and controlling to minority and non controlling the performance impact may be positive in the short run particularly where there is instability in the local investment policy environment consistent with this proposition we develop and test hypotheses derived from a minority and non controlling or residual state ownership framework grounded in credible privatization and institutional theory we propose that 1 residual state ownership positively affects shareholder returns after strategic decisions by privatizing firms because it signals state support for managerial initiatives 2 the passage of time since initial privatization negatively affects shareholder returns after strategic decisions by privatizing firms because initial undertakings in support of the privatizing firm are reversed and 3 home country investment policy stability moderates these two effects greater stability obviates the need for residual state ownership and slows policy reversals over time we find empirical support for our residual state ownership framework in event study analyses of cumulative abnormal returns cars associated with 196 major investments announced from 1986 to 2001 by 15 privatizing telecoms from around the world cars are positive at 5 25 state ownership levels but turn negative at higher state ownership levels cars turn sharply negative within 1 2 years from initial privatization dates increasing policy stability diminishes positive ownership and negative time effects on cars results confirm the potential supporting role that residual state ownership can play in enhancing strategic decision making and financial performance by privatizing firms particularly where there is instability in the home country investment policy environment

corruption and infrastructure at the country and regional level abstractthis paper examines the relationship between corruption and infrastructure at both the country and regional level using the world bank s enterprise surveys data a statistically significant and considerable relationship is established between the measure of corruption in the macro data and the measures of transportation and electricity infrastructure countries with more corruption tend to have worse infrastructure at the regional level the key result is unchanged the magnitude and significance of this result is shown to vary by global region two stage least squares results using distance from the equator as an instrument at the macro level support the simple ordinary least squares ols finally it is shown that within country variation in corruption has a significant effect on regional infrastructure

the efficiency of state owned and privatized firms does ownership make a difference abstract this paper compares the pre and post privatization efficiency of a sample of state owned enterprises privatized in spain with the efficiency of their closest private competitors we perform a two stage double bootstrap data envelopment analysis model in the first stage the efficiency is estimated through a bootstrapped data envelopment analysis and then followed in the second stage by a bootstrapped truncated regression our results provide evidence that i there were no significant differences in efficiency between the state owned enterprises and their private counterparts before privatization and ii the efficiency of newly privatized firms significantly increased after their privatization while private competitors showed no significant improvement during the same post privatization period

toward a theory of regulation for developing countries following jean jacques laffont s lead the efficient operation and expansion of infrastructures in developing countries is crucial for growth and poverty reduction however recent reforms aimed at improving the performance of these sectors have had limited success evidence suggests that in many instances this was because the traditional regulatory theory relied on by policymakers was not suitable for the institutional context in developing countries this article surveys more recent theoretical work focusing on problems with regulation in these countries at the heart of the survey is the work of jean jacques laffont who in the last decade of his life set about developing a theoretical framework for regulation in developing countries we consider the implications of his work which focused on the key institutional limitations faced in developing countries we then discuss where experience suggests that there are important omissions from this modeling bringing in extensions and alternative approaches pursued by other authors we conclude by summarizing the key ways in which regulatory policy will be different when institutions are weak overall we find that an understanding of the institutional context and its implications are crucial when designing a regulatory framework for developing countries

status intertemporal choice and risk taking this paper takes the position that an individual s concern for relative status is expressed in her preferences we embed this hypothesis in an otherwise conventional model of economic growth and examine its consequences the model generates two kinds of equilibrium in the first all individuals always follow a deterministic consumption and investment strategy such a strategy must be linear in output is independent of payo s and technology and only depends on the discount factor this sort of equilibrium exists when the individual cares only about status and the individual production function is convex in investment in contrast the other kind of equilibrium involves convergence to a steady state in which there is persistent and endogenously generated gambling this kind of equilibrium exists in more plausible circumstances the individual has a utility function that may depend on consumption per se as well as implied status and individual production functions are concave we characterize the unique steady state in such a situation and prove that any dynamic equilibrium path must converge to it risk taking arises not from the presumption of a utility function with strictly convex segments as in friedman savage but naturally from a view of utility as depending on relative status our steady state is broadly consistent with the stylized facts that individuals both insure downside risk and to gamble over upside risk and generates similar patterns of risk taking and avoidance across environments with quite di erent overall wealth levels finally in contrast to friedman 1953 endogenous risk taking here is generally pareto ine cient

the frontier of telecommunications deregulation small countries leading the pack interconnection equal access unbundling and industry structure are four key determinants of facilities based competition in telecommunications using these building blocks this paper analyzes the differences in telecommunications regulatory regimes in australia chile guatemala and new zealand assessing the effect on competition and consumer welfare some regulation is necessary as incumbents can prolong their market power after demonopolization by exploiting positive externalities inherent to telecommunications networks the authors emphasize the superiority of market mechanisms over traditional regulatory processes to achieve efficient transactions among operators such market mechanisms need clear rules and credible enforcement

concessions of infrastructure in latin america government led renegotiation this paper analyzes government led renegotiations in infrastructure concession contracts in latin america based on the same sample used in guasch laffont and straub 2003 to examine firm led renegotiations after extending the theoretical framework to a multiple period context in which both pareto improving and rent shifting renegotiations at the initiative of the government can occur we develop an original instrumental variable strategy to address the issue of contract endogeneity and derive empirical results while some of the main insights concerning the importance of having a regulator in place when awarding concessions and the fragility of price cap regulatory schemes are unchanged significant differences arise with respect to the effect of investment and financing as well as the corruption variables we provide evidence that a good regulatory framework is especially important in contexts with weak governance and political opportunism copyright 2007 john wiley sons ltd

bank privatization in sub saharan africa the case of uganda commercial bank previous empirical analyses have found that bank privatizations are more successful when the government fully relinquishes control when the bank is privatized to a strategic investor and when foreign owned banks are allowed to participate in the bidding the privatization of uganda commercial bank ucb to the south african bank stanbic met all these criteria suggesting that it is a likely candidate for success but other features suggest reasons for caution ucb dominated the ugandan banking sector prior to privatization and the institutional environment in uganda was less favorable than in many of the middle income countries looked at in earlier empirical studies despite these concerns the privatization appears to have been relatively successful the portfolio of the privatized bank which was cleaned prior to sale remains relatively strong and profitability and credit growth are now on par with other ugandan banks though market segmentation remains a concern since stanbic faces little or no direct competition in many remote areas some early results suggest that access to credit has improved for some hard to serve groups

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 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

leviathan resists the endogenous relationship between privatization and firm performance using a panel dataset of privatized cement firms in turkey this paper models and finds support for the simultaneous relationship between privatization and firm performance it is found that favorable short run performance weak market potential higher employment lower socio economic development concentrated voter preferences and weaker representation of right wing parties in the firms locality delay the timing of privatization the paper also finds that privatization increases output in the medium term by reducing the labor stock and promoting the adoption of more advanced technology such that production shifts from constant to decreasing returns to scale

competition in telecommunications this paper discusses the scope for competition in the telecommunications industry taking into account the features of natural monopoly network externalities and customer inertia recent policy towards competition in the industry in the uk is surveyed with an emphasis on access pricing and interconnection finally recent theoretical developments in the economics of access pricing and interconnection are discussed and shown to lend some support for aspects of current policy in the uk copyright 1997 by oxford university press

the implications of the liberalization in telecommunication markets for market structure and price policy evidence from a small open economy this study analyses the impact of liberalization on market structure and pricing in the greek telecommunication market from 1992 to 2005 the data refers to 44 of the most prominent companies of fixed telephony mobile telephony and internet services and was compiled by means of interviews with the help of a questionnaire our descriptive analysis concluded that liberalization of the telecommunication market reduced its concentration degree increased competition and induced price cuts this conclusion is supported by other research studies concerning other countries of the eu since greece as an eu member country has also implemented the respective european policy in the specific industry as far as the econometric level is concerned we used panel feasible generalized least squares fgls fgls is an appropriate tool for samples such as our own composed by intersectoral data that extend to more than one time periods and without correlation between the unobserved effects and the interpretative variable

new evidence on the impact of structural reforms on electricity sector performance abstract the evolution of electricity industry over the last decades has shown substantial differences between oecd countries this paper empirically investigates to what extent different structural forms of regulation competition and privatisation explain these international differences it distinguishes three modes of electricity performance a net generation per capita b installed capacity and c labour productivity the empirical model spans the period 1975 2011 and uses panel data econometric techniques our analysis reveals that there is a strongly significant interaction impact on the level of electricity performance between regulation and competition the empirical findings do confirm that a robust independent regulatory scheme must be implemented in order to achieve a competitive electricity market

political independence accountability and the quality of regulatory decision making recent decades have seen a considerable increase in delegation to independent regulatory agencies which has been justified by reference to the superior performance of these bodies relative to government departments yet the hypothesis that more independent regulators do better work has hardly been tested we examine the link using a comprehensive measure of the quality of work carried out by competition authorities in 30 organisation for economic co operation and development oecd countries and new data on the design of these organizations we find that formal independence has a positive and significant effect on quality contrary to expectations though formal political accountability does not boost regulatory quality and there is no evidence that it increases the effect of independence by reducing the risk of slacking the quality of work is also enhanced by increased staffing more extensive regulatory powers and spillover effects of a more capable bureaucratic system

reputation and discretion in financial contracting the authors explain the use of legally unenforceable discretionary financial contracts in circumstances where legally enforceable contracts are feasible a discretionary contract allows a contracting party to choose whether or not to honor the contract it is shown that such a contract liquefies reputational capital by permitting it to be depreciated in exchange for the preservation of financial capital and information reusability in financially impaired states in addition discretionary contracts foster the development of reputation this explains discretion among highly confident letters holding company relationships mutual fund contracts bank loan commitments and other financial and nonfinancial contracts copyright 1993 by american economic association

the financial and operating performance of newly privatized firms an international empirical analysis this study compares the pre and postprivatization financial and operating performance of 61 companies from 18 countries and 32 industries that experience full or partial privatization through public share offerings during the period 1961 to 1990 our results document strong performance improvements achieved surprisingly without sacrificing employment security specifically after being privatized firms increase real sales become more profitable increase their capital investment spending improve their operating efficiency and increase their work forces furthermore these companies significantly lower their debt levels and increase dividend payout finally we document significant changes in the size and composition of corporate boards of directors after privatization the last fifteen years have witnessed a significant global shift away from state socialism towards entrepreneurial capitalism one of the most important and visible aspects of this trend has been the enthusiasm with which governments of all political persuasions have sold their state owned enterprises soes to private investors in hopes that the generally unsatisfactory economic performance of these firms can be improved by the discipline of private ownership this denationalization process given its current title of privatization by the conservative government of margaret thatcher in

lobbies delegation and the under investment problem in regulation abstract a time inconsistency problem in regulation often results in under investment especially where there are high sunk costs in network industries such as electricity gas telecommunications and water this paper provides a new perspective on this hold up problem facing the price regulation of a firm with market power where full commitment to a price regime is not possible we compare a political equilibrium based on a voting model with lobbying with a delegation equilibrium where a government can delegate to a particular type of pro or anti industry regulator our analysis suggests two possible ways in which we may observe price regulation that encourages socially optimal investment in the absence of externally imposed regulatory commitment first there is less than total transparency in which voters receive an optimal amount of information and second the decisions on price are delegated to a sufficiently but not excessively pro industry regulator

the effects of privatization on efficiency how does privatization work summary uncovering the effects of privatization is difficult because privatization of a particular firm usually is not an accident this paper tests the effects of privatization on productive and allocative market efficiency using a rich panel data set of 22 privatized cement plants from turkey in the 1983 99 period since all public cement firms were privatized and we have pre and post privatization data for all we are able to avoid the problem of endogeneity associated with sample selection our analysis goes beyond just examining the privatization effects and explores how privatization really works changes in objectives of the firm ownership effect and changes in market structure environment effect may both be responsible for privatization outcomes we find that ownership effects are sufficient to achieve improvements in labor productivity our results on allocative efficiency however are dependent on changes in the competitive environment while all plants seem to improve labor productivity through work force reductions plants privatized to foreign buyers also increase their capital and investment significantly

ownership changes and access to external financing this paper examines access to external financing in the privatization context and provides new evidence on the effects of financing constraints on performance and investment ownership reforms increase firms reliance on external financing empirically performance and investment changes around ownership reforms are increasing in country level measures of access to credit the presence of a severe prior public financing constraint contributes to stronger investment growth after privatization privatized enterprises do not outperform publicly owned industries all else given our analyses rely on new international sector and firm level data and correct for potential endogeneity of ownership changes

pyramidal groups and debt abstract this paper suggests that debt should be raised by subsidiaries in order to exploit the limited liability of the holding company however when this behavior increases the cost of funds the holding might prefer to raise debt to a point where it would also default when subsidiaries are insolvent after accounting for standard controls we find that holding companies in italian pyramids have higher leverage than subsidiaries and that the cash flow share of the entrepreneur in the subsidiary does not play a significant role these findings are consistent with the implications of our model of group capital structure

bankruptcy limited liability and the modigliani miller theorem this paper examines the validity of the modigliani miller theorem in the presence of bankruptcy the theorem asserts that the value of a firm and the set of return patterns that the capital markets offer to private investors are independent of firm debt equity ratios the usual proof of the theorem is based on the presumption that in perfect capital markets borrowing by firms and borrowing by individuals can be perfect substitutes it is unclear whether this presumption is valid when there is a positive probability that either the firm or the individual who borrows to invest in the firm goes bankrupt on the one hand joseph stiglitz 1969 and robert merton have argued that the modigliani miller theorem remains valid even with bankruptcy if agents who borrow to invest in a firm can limit their liability to the amount of collateral they put up on the other hand vernon smith 1972 has argued that a margin loan which is secured by a pure equity collateral has a different return pattern from a direct loan to the firm and cannot serve as a substitute for the latter see also david baron smith s argument raises a number of issues first it brings out the important fact that return patterns for limited liability borrowing and lending depend on the composition of the portfolio that serves as collateral if a firm goes bankrupt a pure equity collateral is worthless whereas a collateral that contains some bonds may still earn a positive return because the bonds have a privileged claim to the firm s remaining assets in general margin contracts with different collateral compositions will generate different return patterns both for the borrower and the lender given this multiplicity of return patterns on margin loans one would not expect that all margin loans can be used as substitutes for direct loans to the firm this intuition is confirmed by smith s demonstration that a particular margin loan namely the loan on pure equity collateral cannot serve this purpose the question remains open whether this is actually needed for the modiglianimiller theorem it might be enough if some appropriate margin loan could be used as a substitute for lending to the firm in pursuing this problem one finds a gap in the standard proof of the modiglianimiller theorem usually one applies an arbitrage argument to show that as a firm changes its debt equity ratio investors in shares and bonds adjust their portfolios so as to leave their overall return patterns unchanged no such arguments are given for other securities related to the firm in particular for margin investments and for margin loans that serve to finance those margin investments without an analysis of professor of economics university of bonn research on this paper was supported by nsf grant soc 75 13437 at princeton university and by the deutsche forschungsgemeinschaft i have benefited from the advice of dwight jaffee and an anonymous referee in a similar vein stiglitz 1972 asserts the value of the firm decregses because there is a divergence in the estimation of the chances of bankruptcy between the lender and the borrower p 467 this analysis rests upon a form of market segmentation that is without economic merit in his model there are two groups of agents optimists and pessimists the optimists invest all their wealth in the firm s equity valued to make the rate of return equal to that on the riskless asset the pessimists are indifferent between the risky firm s bonds and the riskless asset it follows that the optimists being more optimistic than the pessimists must prefer the risky bond to the riskless asset and hence to the equity yet stiglitz assumes that the optimists invest in the equity and not in the risky bond of course if one group invests all its wealth into one asset that asset need not satisfy a marginal equality condition at all a correct analysis of his model leads to the results of this paper

on optimal economic growth with changing technology and tastes characterization and stability results in this paper we consider a framework of optimal growth in which technology and tastes are changing over time the model is an aggregative one and follows closely those studied by brock 1971 and brock and gale 1969 in this framework we address two important issues in the area of optimal intertemporal allocation of resources first we provide price characterizations of weakly maximal and optimal programs weak maximality and optimality are defined following the approach of brock 1970 and gale 1967 respectively in section 2 second we provide asymptotic stability properties of weaklymaximal and optimal programs price characterizations are of importance since they imply that socially desirable allocations can be attained by decentralized maximizing decision making of firms and consumers 2 the decentralization being accomplished through a pricesystem provided an appropriate additional condition on asymptotic behavior of input values3 is satisfied in the literature it is this additional condition which has not been precisely characterized in a model with changing technology and tastes to find this additional condition we have found it useful to draw on the results obtained in the theory of efficient allocation of resources which deals with a similar problem of price characterization of efficient programs for weakly maximal programs the appropriate condition is that the reciprocal of the input values should not be summable theorem 3 1 for optimal programs the input values should be uniformly bounded theorems 4 1 and 4 2 the results of brock 1971 and benveniste and gale 1975 are particularly important in obtaining these results it should be noted that criteria for the existence of optimal programs in various particular cases of our framework have been given by mirrlees 1967 phelps 1966 and inagaki 1970 a unified elegant treatment of this question is given in brock and gale 1969 consequently we do not address this issue in our paper the asymptotic stability properties of weakly maximal and optimal programs

an econometric analysis of telecom competition privatization and regulation in africa and latin america this paper explores the effects of privatization competition and regulation on telecommunications performance in 30 african and latin american countries from 1984 through 1997 fixed effects regressions reveal that competition measured by mobile operators not owned by the incumbent is correlated with increases in the per capita number of mainlines payphones and connection capacity and with decreases in the price of local calls privatization combined with an independent regulator is positively correlated with telecom performance measures privatization alone however is associated with few benefits and is negatively correlated with connection capacity

deregulating with no regulator is the german electricity transmission regime institutionally correct abstract from 1998 to 2005 the german transmission grid has been put under a self regulated arrangement it seems hard to believe that transmission lines can be opened to third party access only with a negotiated access regime and no regulator supervision it seems contradictory with the notion of ex post contractual hazards promoted by v goldberg and o williamson if a weak institutional arrangement is implemented one might assume that it has to be harmful to network and market access if it is not to be inefficient why and how could it work when looking at rules and prices for accessing the transmission network and the corresponding wholesale markets in germany the club arrangement for transmission opening does not appear so harmful accordingly we have to reconsider the ex ante and ex post institutional mechanism of such a club arrangement ex ante we first reconsider skills and strengths of industrial consumers and german business associations in defining and assessing rules of transmission access we underline that incomplete vertical and horizontal integration of german electricity companies impeded extensive cartel collusion ex post we first look at a strong competition authority backing then we discover that ex ante and ex post dimensions are much more mixed and reinforced in an open cumulative pro competition process framed by the competition authority

capital income taxation and perfect foresight abstract this paper develops a perfect foresight model of capital income taxation in a representative household neoclassical one sector framework the household sector is based on intertemporal utility maximization the main result is the equivalence of a perfect foresight solution and an artificial central planning solution if there is no tax this is the equivalence of a market equilibrium and social optinum the equivalence result is used to deduce the implications of a partial tax reform policy it is shown that a partial reform increases capital at each time following the initial period of the program

impacts on investments and transmission distribution loss through power sector reforms abstract this study analyses original panel data from 86 countries between 1985 and 2006 econometric methods were used to identify the effects of different policy devices of power sector reforms on performance indicators installed capacity per capita transmission and distribution loss in the countries analyzed the research findings suggest that reform variables such as the entry of independent power producers ipps unbundling of generation and transmission establishment of regulatory agencies and the introduction of a wholesale spot market are the driving forces of increasing generation capacity as well as reducing transmission and distribution loss in the respective regions in this study we can assume that firstly different electric industry s reform policies measures have different impacts on geographically and economically diverse countries secondly a country s state of economic development has a different impact on policy effects of reforms thirdly coexistent with independent regulatory agencies reform policy becomes more powerful in realizing sector performances

the strategic impact of resource flexibility in business groups we show that in business groups with efficient internal capital markets resources may be channelled to either more or less profitable units depending on the amount of internal resources a group may exit a market in response to increased competition or channel funds to the subsidiary operating in that market this has important implications for the strategic impact of group membership affiliation to a monopolistic subsidiary can make a cash rich poor firm more less vulnerable to entry deterrence also resource flexibility within a group makes subsidiaries reaction functions flatter thus discouraging rivals strategic commitments when entry is accommodated

regulation competition and liberalization in many countries throughout the world regulators are struggling to determine whether and how to introduce competition into regulated industries this essay examines the complexities involved in the liberalization process while stressing the importance of case specific analyses this essay distinguishes liberalization policies that generally are procompetitive from corresponding anticompetitive liberalization policies

business groups and social welfare in emerging markets existing evidence and unanswered questions abstract this paper reviews existing studies of the role of emerging market business groups a ubiquitous but poorly understood organizational form i first suggest that understanding the definition of business groups is itself an interesting albeit under studied research issue i then argue that the existing evidence suggests that the performance effects of group affiliation are large and generally positive there is substantial evidence that part of this is due to welfare enhancing functions originating in the idea that groups substitute for missing outside institutions but that part is also due to welfare reducing minority shareholder exploitation evidence is lacking on the extent to which groups facilitate rent seeking or the exercise of market power evidence is also lacking on the extent to which groups hamper the future development of markets the paper identifies areas where research is needed before current competition policy experiments in countries like china india and korea can be evaluated

turnpike theorems in nonconvex nonstationary environments this paper provides a comprehensive development of turnpike theory in a stochastic aggregative model with time varying nonconvex technology a new approach to turnpike theorems is developed that exploits the monotonicity of optimal programs and utilizes a supermartingale process generated by stochastic euler equations this extends the classical turnpike theory to general nonconvex nonstationary environments copyright 1997 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the privatization of the fixed line telecommunications operator in oecd latin america asia and africa one size does not fit all summary this paper challenges the idea that there exists a unique model of reform for infrastructure sectors which is equally applicable across regions and countries and expected to yield similar outcomes we perform an empirical analysis of the impact of privatization of the fixed line activity of the traditional telecommunications operator on network expansion tariffs and labor efficiency in a 1985 2007 data set on a selection of 108 countries that we split into regional sub samples we find that the performance of privatization depends to a large extent on regional factors related to market profitability wealth and geography

internal versus external capital markets this paper presents a framework for analyzing the costs and benefits of internal versus external capital allocation we focus pritnarily on comparing an internal capital market with bank lending while both represent centralized forms of financing in the former case the financing is owner provided while in the latter ceise it is not we argue that the ownership aspect of internal capital allocation has three important consequences 1 it leads to more monitoring than bank lending 2 it reduces managers entrepreneurial incentives and 3 it makes it easier to efficiently redeploy the assets of projects that are performing poorly under existing management

the flotation of companies on the stock market abstract in some countries the size of the stock market and the number of listed companies have persistently lagged behind the growth of the economy trading externalities can help explain this fact an entrepreneur who goes public increases risk sharing opportunities for others this externality can lead to an inefficiently low number of listed companies and also generate multiple equilibria when flotation decisions are positively correlated across entrepreneurs this happens if these face borrowing constraints and lack liquidity and thus cannot diversify their portfolios unless they go public it also happens if trading shares is costly so that a sufficient number of issues must be listed to lure investors into the market

the financial and operating performance of newly privatized firms evidence from developing countries this paper examines the change in the financial and operating performance of 79 companies from 21 developing countries that experienced full or partial privatization during the period from 1980 to 1992 we use accounting performance measures adjusted for market effects in addition to unadjusted accounting performance measures both unadjusted and market adjusted results show significant increases in profitability operating efficiency capital investment spending output employment level and dividends we also find a decline in leverage following privatization but this change is significant only for unadjusted leverage ratios our results are generally robust when we partition our data into various subsamples

surviving the crisis foreign multinationals vs domestic firms starting from the observation that all firms in ireland foreign and domestic in manufacturing and services industries were hit by the crisis the paper asks whether there is a difference in the behaviour of foreign and domestic firms one hypothesis is that foreign multinationals are less linked into the irish economy so more likely to leave once the economy is hit by a negative shock the paper discusses background hypotheses before giving empirical evidence from firstly aggregate data and secondly firm level observations the analysis of the latter suggests that foreign firms are not more likely to leave during the crisis than irish firms some policy conclusions are offered in the paper