Incentives for Anticompetitive Behavior by Public Enterprises

Sappington, David E. M.; Sidak, J. Gregory

doi:10.2139/ssrn.269489

Cited by 36 publications

(30 citation statements)

References 45 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…In this section, I consider a number of alternative explanations for the increase in the toll government); Sappington and Sidak (2003) provide a formal analysis of price setting by a government owned enterprise in this last case. rate associated with ETC.…”

Section: Alternative Explanationsmentioning

confidence: 99%

E-ZTAX: Tax Salience and Tax Rates^*

Finkelstein¹

2009

Quarterly Journal of Economics

432

117

View full text Add to dashboard Cite

This paper tests the hypothesis that the salience of a tax system affects equilibrium tax rates.To do this, I analyze how toll rates change after toll facilities adopt electronic toll collection. Unlike manual toll collection, in which the driver must hand over cash at the toll collection plaza, electronic toll collection automatically debits the toll amount as the car drives through the toll plaza, thereby plausibly decreasing the salience of the toll. I find robust evidence that toll rates increase following the adoption of electronic toll collection. My estimates suggest that, in steady state, toll rates are 20 to 40 percent higher than they would have been without electronic toll collection. Consistent with the hypothesis that decreased tax salience is responsible for the increase in toll rates, I also find evidence that the short run elasticity of driving with respect to the actual toll declines (in absolute value) following the adoption of electronic toll collection. I consider a variety of alternative explanations for these results and conclude that these are unlikely to be able to explain the findings.Key Words: tax salience; size of government; tolls, electronic toll collection JEL Classification Codes: H11, H71, R48 I am grateful to Daron Acemoglu, David Autor, Raj Chetty, Peter Diamond, Liran Einav, Mike Golosov, Erzo Luttmer, Sean Nicholson, Ben Olken, Jim Poterba, Nancy Rose, Stephen Ryan, Monica Singhal, and seminar participants at Cornell, MIT, Berkeley, and Stanford GSB for helpful comments, to Julia Galef for outstanding research assistance, and to the innumerable employees of toll operating authorities around the country who generously took the time to provide data and to answer my many questions 1

show abstract

Section: Alternative Explanationsmentioning

confidence: 99%

E-ZTAX: Tax Salience and Tax Rates^*

Finkelstein¹

2009

Quarterly Journal of Economics

432

117

View full text Add to dashboard Cite

show abstract

“…For the government, which sets the rules for competitive markets, to also be a competitor raises issues of whether the government will play fairly. In a recent paper analyzing such competition, Sappington and Sidak (2003) show that government-owned enterprises may have greater incentives to create barriers to entry than do private firms. Similarly, Edwards and Waverman (2006) show that European national regulatory authorities have a greater tendency to favor incumbent telecommunications providers in issues related to competition when the providers are at least partially government owned.…”

Section: Introductionmentioning

confidence: 99%

Bureaucrats as entrepreneurs: Do municipal telecommunications providers hinder private entrepreneurs?

Hauge

Jamison

Gentry

2008

Information Economics and Policy

View full text Add to dashboard Cite

Abstract:We consider how government-owned enterprises affect privately owned rivals. Specifically, we compare the types of markets that municipally owned telecommunications providers in the United States serve to the types of markets that competitive local exchange carriers (CLECs) serve. We find that CLECs focus on potential profitability while municipalities appear to respond to other factors, such as political considerations or the desire to provide competition to incumbents. As a result, municipal providers tend to serve markets that CLECs do not. We also find that the presence of a municipal provider in a market does not affect the probability that a CLEC also serves that market. Our results suggest municipalities may not pose a significant competitive threat to CLECs and do not preclude CLEC participation.

show abstract

“…105 Sappington and Sidak (2003) note that an SOE's reduced focus on profit can increase its incentives to engage in anticompetitive activities. If, for example, an SOE is more concerned with market share than profit, the SOE may be more willing than a profit-maximizing firm to implement below-cost pricing for an extended period of time.…”

Section: Ensure Adequate Monitoring and Data Reportingmentioning

confidence: 99%