Contemporary Monopolies in the Polish Economy – the Case Study of PWPW

Remigiusz Lewandowski

doi:10.12775/oec.2014.023

Abstract

The paper presents the role of PWPW, as a company with some attributes of a natural monopoly, in contemporary Polish economy. It shows that commercial companies – performing special tasks which are necessary for the functioning of state and which concern identification as well as transactional security and at the same time take advantages of the economy of scale and range as a condition of their presence and development – have a logically justified place in the economy. They are a source of benefits for shareholders in the form of taxes, dividends and other economic benefits, as well as the value of the company itself. Moreover, they are creators of domestic employment and they enrich the national potential of technology. Also, such firms provide a right level of identification and transactional security, which influences the stability and reliability of legal and economic relations. The necessary conditions in order to realize the benefits coming from owning a company such as PWPW by the state are the company’s business continuity, the stability of its domain of action and the financial stability. These conditions can be fulfilled through a certain partnership between the state and PWPW in the form of a legal monopoly or lasting and stable commercial contracts.

Highlights

The portfolio of companies controlled by the Treasury includes both entities that the state expects only to have their value maximised, as well as entities for which the expectations exceed the value of the maximisation postulate
The purpose of this paper is to present the role played by state-controlled monopolists in contemporary economy by using Polska Wytwórnia Papierów Wartościowych S.A. (PWPW) as an example
The present paper, based on the PWPW case study, leads to the conclusion that in the area relating to state security and protection of national strategic interests it is justified to keep in the State Treasury portfolio companies providing goods and services necessary to keep the said security

Summary

Introduction

The portfolio of companies controlled by the Treasury includes both entities that the state expects only to have their value maximised, as well as entities for which the expectations exceed the value of the maximisation postulate. This company acted at the time as PWPW’s competitor in the field of document production, but it was unable to endure the competition and in 2004, while in terrible financial condition, it was acquired by PWPW Another effectiveness-impairing factor would be the limitation of the so-called economies of scope. In smaller countries the purchase orders for banknotes and documents are fulfilled by foreign companies This dichotomy concerning the supply of various countries with documents and banknotes results directly from the natural factors discussed that are present or absent in the individual countries, i.e. the demandable scale of production (resulting primarily from the number of citizens and inflation) and the technological competencies developed.

22 Lithuania

Conclusions