Service Oligopolies and Australia’s Economy-Wide Performance

Rodney Tyers

No 14-18, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: The retreat from public ownership of service firms and industries has left behind numerous private monopolies and oligopolies supervised by regulatory agencies. Services industries in government and private ownership generate two-thirds of Australia’s value added, while the newly privatised ones, utilities, telecommunications, finance and transport, supply a fifth. This study offers an economy-wide approach that represents monopoly and oligopoly behaviour explicitly. It examines the implications of oligopoly rents for factor markets and the real exchange rate, the extent of sectoral interactions and the potential economy wide gains from tighter price cap regulation. The results confirm that the level of non-linear interaction between oligopoly sectors justifies an economy-wide approach. Moreover, pricing surveillance and price cap regulation are shown to play very significant roles in sustaining economic efficiency, helping avoid costs from oligopoly distortions that, in the absence of regulation, could amount to a third of Australia’s GDP.

Pages: 55 pages
Date: 2014
New Economics Papers: this item is included in nep-ind
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Related works:
Journal Article: Service Oligopolies and Australia's Economy-Wide Performance (2015)
Working Paper: Service Oligopolies and Australia's Economy-Wide Performance (2008)
Working Paper: SERVICE OLIGOPOLIES AND AUSTRALIA'S ECONOMY-WIDE PERFORMANCE (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:uwa:wpaper:14-18

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