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L - Industrial Organization

Industrial Organization

JEL Code: 

China’s Decentralized Privatization and Change of Control Rights

A distinctive feature of China’s privatization is that both its design and its implementation are highly decentralized and are administered by the local governments. Based on a survey of three thousand firms in over one hundred Chinese cities, this paper studies how city governments choose among various privatization methods, how these different methods transfer control rights from the government to private owners, and how various privatization methods lead to different restructuring and performance.

China’s Charitable Foundations: Development and Policy-Related Issues

As an innovative form of social organization, the charitable foundation is a new phenomenon in the People’s Republic of China. Since 2004, when the new Regulations on Administration of Foundations were promulgated, the foundation sector has experienced rapid growth. However, compared to its potential and the important role the foundation sector can play in China’s social development, a more favorable institutional and legal environment should be considered to boost its expansion.

Opportunities and Challenges for China-US Economic andTrade Cooperation in the Process of US Re-Industrialization

Although the US-China relationship has been strained by the latter’s economic and military rise over the last decade, China’s development can benefit the US in a variety of ways. This paper argues that the most important facet of the US recovery is the reindustrialization of a largely service-based economy. To accomplish that goal, this paper suggests that the United States end barriers to Chinese FDI and eliminate export controls set up during the Cold War.

Urban Transport: Can Public-Private Partnerships Work?

Poor maintenance, slow expansion of streets and urban highways and excessive congestion are chronic in many cities. This chapter argues that public-private partnerships (PPPs) can be used to improve the timing of new investments, ensure adequate maintenance of highways and streets and manage congestion with road user charges. Nevertheless, PPPs will only work with timely public planning, deft contract design and enforcement and competent inter jurisdiction coordination.

Are Renewable Quotas Effective to Reduce CO2 Emissions?

We quantify the intertemporal impact of a renewable quota on CO2 emissions, pollution and welfare. We find that a quota substitutes investments in baseload technologies. Therefore quotas have little impact on CO2 and pollution in systems that expand baseload with hydro. We also find that quotas can be quite expensive and their impact is highly nonlinear. With detailed data on Chile’s system we estimate that a 5% quota is not binding, a 10% quota causes a small deadweight loss but a 20% quota multiplies the deadweight loss by a factor of 55, to about 7% of the system’s supply cost.

Regulated Electricity Retailing in Chile

While some countries have unbundled distribution and retailing, skeptics argue that the physical attributes of electricity make retailers redundant. Instead, it is claimed that passive pass through of wholesale prices plus regulated charges for transmission and distribution suffice for customers to benefit from competitive generation markets. We review the Chilean experience with regulated retailing and pass through of wholesale prices. We argue that when energy wholesale prices are volatile and prices are stabilized, distortions emerge.

Soft Budgets, Renegotiations, and Public-Private Partnerships

Renegotiations of PPPs are pervasive. We argue that they can be used by incumbents to elude normal budgetary constraints and anticipate infrastructure spending. We show that renegotiations foster lowballing in ex ante auctions and both include additional compensations for the works originally contracted and add works not contemplated in the original contract. Nevertheless, spending anticipation is not inherent to PPPs, but the consequence of defective accounting standards. We show that if PPP investments are included as investments in the public budget spending caps prevent anticipation.

Innovative Firms or Innovative Owners? Determinants of Innovation in Micro, Small, and Medium Enterprises

Innovation is key to technology adoption and creation, and to explaining the vast differences in productivity across and within countries. Despite the central role of the entrepreneur in the innovation process, data limitations have restricted standard analysis of the determinants of innovation to consideration of the role of firm characteristics. We develop a model of innovation which incorporates the role of both owner and firm characteristics, and use this to determine how product, process, marketing and organizational innovations should vary with firm size and competition.

Dispute Resolution Mechanisms in the Telecom Sector: Relating International Practices to Indian Experience

This paper analyzes the impact of the changing telecom environment on the nature of disputes that arise in this sector. It focuses on the need to resolve disputes in an efficacious, expeditious and transparent manner to ensure unhindered growth of the telecom sector. The paper draws upon several country specific examples to show how this subject is receiving increasing attention and has in fact become a significant feature of regulatory initiative.

The Impact of Policy and Regulatory Decisions on Telecom Growth in India

This paper analyzes the transition of the Indian telecom sector from a monopolistic to a competitive environment. Though similar transitions have occurred in other countries, India’s shift is particularly striking due to the short period within which changes occurred. The National Telecom Policy of 1994 and the New Telecom Policy of 1999 established a strong and independent regulatory mechanism with well-defined powers and responsibilities.


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