Threatening to increase productivity
Benjamin Bridgman (),
Victor Gomes () and
Arilton Teixeira ()
MPRA Paper from University Library of Munich, Germany
The wave of privatization in the 1980s and 1990s increased productivity of many previously state owned enterprises (SOEs). However, governments often do not have su±cient support to privatize SOEs. We provide evidence that threatening privatization and market competition (entry of new firms) can increase the productivity of SOEs, even though privatization and entry of new ¯rms does not occur. We study productivity at Brazil's state-owned oil company Petrobras. After it lost its legal monopoly Petrobras's total factor productivity increased sharply. These large gains occurred despite the fact that Petrobras faced no immediate de facto competition. The threat of competition and privatization was su±cient to generate large productivity gains. These findings suggest that changing the competitive environment can be a powerful force for improving productivity at state-owned firms.
Keywords: Productivity; Competition; Oil Industry (search for similar items in EconPapers)
JEL-codes: L20 D43 D24 (search for similar items in EconPapers)
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Working Paper: Threatening to Increase Productivity (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:33024
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