The Impact of Privatization and Competition in the Telecommunications Sector around the World

Abstract

Abstract. Using a comprehensive country-level panel data set covering the period f rom 1981 to 1998, we examine the impact of privatization and competition in the telecommunications sector around the world. Privatization contributed substantially to labor shedding, output growth, network expansion, and improvements in labor productivity as well as total factor productivity. But how countries privatized is important. Share issue privatization facilitated the development of the mobile market segment. Granting a newly privatized operator a period of exclusive market access, on the other hand, reduced the gains from privatization (due to the output-restricting tendency associated with market power) but not entirely negated the gains. The presence of competitive pressure in the market was associated with more employment, higher output, faster network expansion, and higher labor and total factor productivity. We find evidence of complementarity between privatization and competition in that competition increased the gains from privatization and vice versa. Our estimates show that half of the output growth between 1990 and 1998 was attributable to privatization and competition after controlling for input growth. Competition appeared to have a larger impact on labor and total factor productivity than privatization.

The impact of regulation on the retail prices in fixed-line telephony across the European Union

“…He finds that establishing a regulatory authority before privatizing the telecommunications incumbent is correlated with increased fixed-line penetration, telecom investments and subscriptions to mobile telephony. Li and Xu (2000) use panel data to examine the impact of privatization and competition on fixed-line subscriptions, labor and factor productivity in the telecommunications industry worldwide. Fink et al (2002) use panel data for 86 developing countries to analyze the impact of policy reform on fixed-line telecommunications.…”

Regulation and corporate corruption: New evidence from the telecom sector

“…Ai and Sappington, 2005), operating efficiency (e.g. Li and Xu, 2004;Berg, Lin and Tsaplin, 2005), and the provision of public goods (Bose, Capasso, and Murshid, 2008). We add to the existing literature by showing that regulatory schemes have significant effects on reducing the form of corruption that is associated with obtaining access to service.…”

Privatisation processes and firm performance : the Libyan industrial sector

“…This implies that a market could be defined as competitive when there are a large number of sellers of a homogenous product, so that no sellers had enough market share to enable them to influence the product price by changing the quantity that they put onto the market (Cook, Kirkpatrick, Minogue & Parker, 2003). Li and Xu (2004) documented that countries executing a full privatisation and competition experienced significant performance gains compared with countries that implemented less aggressive reform policies. Several studies argued that competition is a more important determinant of allocative efficiency than whether a firm is state or privately owned.…”

“…Bear in mind that changes in the environment policies including subsidies, land and labour reform after privatisation may also have affected plantation performance. Li and Xu (2004) investigated the impact of privatisation and competition on the telecoms sector in 177 countries between 1990 and 2001. They distinguished two types of privatisation: full privatisation, which gave the owners control rights, and partial privatisation, in which the state retained control rights.…”

“…They distinguished two types of privatisation: full privatisation, which gave the owners control rights, and partial privatisation, in which the state retained control rights. Li and Xu (2004) examined the impact of these reforms on employment, investments, labour and total productivity, output and service pricing, and network expansion in both fixed-line and mobile market segments. They found robust evidence that both privatisation and competition contributed substantially to improved performance along multiple dimensions.…”