2009年-世界发展银行全球_Infrastructure_and_Public_Utilities_Privatization_in_Developing_Countries_24页_231kb

Summary of "Infrastructure and Public Utilities Privatization in Developing Countries"

Core Content

This article by Emmanuelle Auriol and Pierre M. Picard examines the privatization of infrastructure and public utilities in developing countries, focusing on the tradeoff between fiscal benefits and consumer surplus. It uses a theoretical model to evaluate whether privatization or public ownership with regulation is more optimal, depending on the market structure, profitability, and budget constraints of the government.

Main Viewpoints

• Privatization transfers control rights to private interests, eliminates public subsidies, and provides fiscal benefits to governments. However, it leads to higher consumer prices and reduced consumer surplus.
• Public ownership allows governments to regulate prices and entry, but may result in inefficiencies due to lack of competitive pressure and potential insider rents.
• The optimal decision to privatize or regulate depends on:
  • The profitability of the industry.
  • The opportunity cost of public funds (denoted by λ), which reflects the budget constraint of the government.
  • The presence of asymmetric information, which affects the ability of the government to monitor firms and regulate effectively.

Key Findings

1. Privatization vs. Regulation

• Low profitability industries (e.g., infrastructure in poor regions) may benefit from privatization due to the fiscal relief it provides, even with the associated monopoly pricing distortions.
• High profitability industries may be suboptimal for privatization if the government cannot recoup sufficient revenues from franchise fees or if the opportunity cost of public funds is high.
• Regulation is preferred when the market has room for multiple firms, as it allows for price control and revenue collection without the inefficiencies of monopoly.

2. Role of the Opportunity Cost of Public Funds (λ)

• Low λ (indicating a wealthy government) favors public ownership to maximize consumer surplus.
• High λ (indicating a financially constrained government) favors privatization to increase fiscal resources.
• The relationship between privatization and λ is nonmonotonic in some cases, particularly when natural monopolies are profitable and regulation is not benevolent.

3. Impact of Asymmetric Information

• Under asymmetric information, the government cannot fully monitor firms, leading to information rents and distorted production.
• This increases the social cost of subsidies, making privatization more attractive in such scenarios.
• The absence of credible regulatory agencies in developing countries often leads to renegotiation of concessions, undermining the effectiveness of regulation.

4. Empirical Evidence

• Megginson and Netter (2001) show that output from state-owned enterprises in developing countries declined from 16% of GDP in 1980 to 8% in 1996.
• Davis et al. (2000) indicate that privatization proceeds are used to reduce domestic financing, with a one-to-one substitution.
• Guasch (2004) notes that concession contracts are often tendered for maximum fees, not minimum prices, due to asymmetric information.
• Wallsten (2001) finds that exclusivity periods significantly increase privatization prices, often at the expense of consumer welfare.

5. Policy Implications

• Developing countries should focus on high-income market segments for public utilities, setting higher prices to subsidize new connections or public goods.
• Public-private partnerships are suggested as a means to shift investment costs from the government to private actors while maintaining some level of control.
• Effective regulation is crucial, but developing countries often lack the institutional capacity to implement it.

Key Information

• Fiscal benefits of privatization come from revenue generation and reduced subsidies.
• Consumer surplus is reduced due to monopoly pricing and increased prices post-privatization.
• Noncompetitive sectors (e.g., infrastructure, utilities) are more likely to be privatized in developing countries due to budget constraints.
• Regulation is a substitute for public ownership when asymmetric information prevents effective monitoring.
• Entry fees and franchise fees are important for revenue generation, but asymmetric information limits their effectiveness.
• Natural monopolies may be privatized only when profitability is low or regulatory capacity is weak.

Conclusion

The article concludes that the decision to privatize or regulate infrastructure and public utilities in developing countries is context-dependent. While privatization can offer fiscal relief, it may also lead to higher consumer prices and inefficiencies. Public ownership with benevolent regulation is more socially optimal in some cases, particularly when market institutions are weak and budget constraints are tight. The opportunity cost of public funds plays a central role in this decision, with high λ favoring privatization and low λ favoring regulation.