Regulation by Public Options: Evidence from Pension Funds

Pablo Blanchard, Sebastian Fleitas and Rodrigo González Valdenegro ()
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Rodrigo González Valdenegro: Charles River Associates

No 03-26, Documentos de Trabajo (working papers) from Instituto de Economía - IECON

Abstract: We study the equilibrium welfare effects of using state-owned enterprises (SOEs) to discipline market power. We estimate a dynamic equilibrium model of Uruguay’s individual capitalization pension system, where a high-quality SOE competes with private firms in the presence of worker inertia. We find that the presence of a SOE lowers equilibrium fees and increases investment returns. Replacing it with a private firm would more than double its fee and raise private firms’ fees by 8 percent. Reducing inertia mitigates but does not offset privatization. Comparing policy instruments, we show that direct price regulation yields higher welfare gains than competition through an SOE.

Keywords: competition; state-owned firms; pension funds; regulation (search for similar items in EconPapers)
JEL-codes: H4 L21 L51 N2 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2026-02
New Economics Papers: this item is included in nep-age, nep-com and nep-reg
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https://hdl.handle.net/20.500.12008/53529

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Persistent link: https://EconPapers.repec.org/RePEc:ulr:wpaper:dt-03-26

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