Privatization and liberalization in vertically linked markets

Frank Stähler and Stefan Traub ()

No 95, TranState Working Papers from University of Bremen, Collaborative Research Center 597: Transformations of the State

Abstract: State-owned enterprises (SOEs) are often vertically integrated firms which operate in key industries like transport, telecommunication and power generation. They provide an infrastructure and invest in its quality. We discuss the effects of liberalization and their privatization which can be complete or partial such that upstream production is still run by an SOE. We show that granting a downstream rival access to the infrastructure of a vertically integrated private firm is welfare improving in most cases even if a holdup problem exists. For any vertically separated structure we find that privatization through multi-product firms welfare dominates privatization through single-product firms.

Keywords: Privatization; vertical integration; state-owned enterprises (search for similar items in EconPapers)
JEL-codes: H54 L23 L33 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-bec and nep-com
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:sfb597:95

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