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Liberalisation in a world of second best: evidence on European network industries

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  • Ugur, Mehmet

Abstract

This article reports mixed results about the impacts of liberalisation in European network industries. Telecommunications prices have fallen and converged across EU-15, but electricity and gas prices have either increased or diverged. Productivity has increased, but mainly as a result of falling employment in absolute and relative terms. Liberalised industries are still characterised by high levels of market concentration and low levels of transparency and market integration. These findings are in line with the predictions of the theory of second best and suggest that the case for liberalisation of network industries has been oversold.

Suggested Citation

  • Ugur, Mehmet, 2009. "Liberalisation in a world of second best: evidence on European network industries," Greenwich Papers in Political Economy 3983, University of Greenwich, Greenwich Political Economy Research Centre.
    • Handle: RePEc:gpe:wpaper:3983
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    References listed on IDEAS

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    1. Charles Blackorby, 1990. "Economic Policy in a Second-Best Environment," Canadian Journal of Economics, Canadian Economics Association, vol. 23(4), pages 748-771, November.
    2. James B. Bushnell & Erin T. Mansur, 2005. "Consumption Under Noisy Price Signals: A Study Of Electricity Retail Rate Deregulation In San Diego," Journal of Industrial Economics, Wiley Blackwell, vol. 53(4), pages 493-513, December.
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    6. Stefan Buehler, 2005. "The Promise and Pitfalls of Restructuring Network Industries," German Economic Review, Verein für Socialpolitik, vol. 6(2), pages 205-228, May.
    7. Richard Lipsey, 2007. "Reflections on the general theory of second best at its golden jubilee," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(4), pages 349-364, August.
    8. Fiorio, Carlo V. & Florio, M. & Salini, S. & Ferrari, P.A., 2007. "Consumers' Attitudes on Services of General Interest in the EU: Accessibility, Price and Quality 2000-2004," Privatisation Regulation Corporate Governance Working Papers 12195, Fondazione Eni Enrico Mattei (FEEM).
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    More about this item

    Keywords

    liberalisation; network industries; second-best; public policy; European Union; price convergence; market power; price transparency;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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