Competition for Local Public Services with Learning-by-doing and Transferability

Klenio Barbosa and Pierre Boyer

No 06-2011, Working Papers from Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto

Abstract: Many local governments allow competition between public and private rms for provision of local public services in order to reduce procurement cost. Competition is usually introduced through competitive tendering for concession contracts. We show that in a symmetric competition between public and private rms with learning-by-doing, private rm's ability to transfer learning among concessions may reduce consumer's welfare. The model provides testable implications which are consistent with the empirical evidence: little competition for concessions, retail prices higher under private operation than under public one, and subsidies and retail prices to service providers increased over time. In addition, consumers' gains from switching to private ownership are higher in industries where private rms have low-ability to transfer learning among di erent concessions.

Keywords: Sequential Auction; Public versus Private Firms; Learning-by-doing; Transferability of Learning (search for similar items in EconPapers)
JEL-codes: D44 H57 H70 H87 (search for similar items in EconPapers)
Date: 2011-02
New Economics Papers: this item is included in nep-com, nep-cta, nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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