Private Competition Research Articles

Competition, corporate governance and corporate performance

Purpose – The purpose of this paper is to examine the nature of interactive effect of competition and corporate governance on productivity growth of firms in Nigeria. Studies that have considered this issue were mainly from developed countries possessing strong institutions as against those of developing countries like Nigeria. Moreover, studies from Nigeria have focused exclusively on corporate governance and firm performance. The interaction effect of competition on corporate governance is yet to be addressed in the context of Nigeria. Design/methodology/approach – The study adopts the dynamic panel data analysis approach suggested by Arellano and Bond for productivity growth analysis. Data on 76 non-financial firms for 11 years beginning from 1997 were extracted from the financial statements of companies collected from the Nigerian Stock Exchange and subsequently analysed using General Methods of Moments (GMM). Findings – The results show that competition had a positive impact on productivity growth, however, its interaction effect with corporate governance had a substitute but not significant impact on productivity growth. When competition was interacted with an alternative corporate governance mechanism – bank – a positive and significant impact was, however, observed which shows that competition and bank loans are complementary in stimulating productivity growth of firms in Nigeria. Research limitations/implications – The study could not be carried out beyond year 2007 owing to the exit of some firms after 2007 which could have reduced the sample size drastically. The findings emanating from this study suggests that government should focus much more on implementing competitive policies and bother less on writing corporate governance codes. Practical implications – The results demonstrate that corporate governance had no significant impact on productivity growth even when it was interacted with competition. However, competition on its own had a significant impact on productivity which means that Nigeria should concentrate more on building a competitive private sector, and in this regard, government should try and pursue policies that will foster competition and eliminate monopolistic tendencies. Once, there is effective competition, the corporate governance may be strengthened. However, the interactive effect of competition and bank loans was found with a positive and significant impact which indicates that banks as alternate corporate governance mechanism can only be effective if competition is strong. This goes to show that the financial sector may not be able to effectively and positively impact the real sector in Nigeria if the prevailing level of competition is low. In such a situation finance may not be channelled to projects that have long-run implications on sustainable growth and development. Social implications – Socially, if the environment for competition is not fostered in Nigeria, the country may face an uphill task in combating the problem of poverty through a private sector-led solution. Hence, there is a need for government to begin to formulate comprehensive competition policies that will ensure that resources are optimally utilized in Nigeria. Originality/value – In the context of Nigeria, this study is novel, the use of productivity growth as against firm financial performance is unique for Nigeria while the use of GMM method of analysis helps in reducing the effect of endogeneity inherent in corporate governance and performance of firms in Nigeria.

A multi-method exploratory study of stress, coping, and substance use among high school youth in private schools.

There is growing awareness that students’ experiences of stress may impede academic success, compromise mental health, and promote substance use. We examined these factors in an under-studied population, private/independent high school students, using a multi-method (qualitative and quantitative), iterative data collection and analytic process. We first conducted qualitative interviews with faculty and staff at a number of highly competitive private schools, followed by an anonymous quantitative survey with 128 11th grade students from two of these settings. We then conducted a qualitative exploration of the quantitative results with a subset of students. Next, a set of Expert Panel members participated in qualitative interviews to reflect on and interpret study findings. Overall, we found students experienced high levels of chronic stress, particularly in relation to academic performance and the college admissions process. While students described a range of effective, adaptive coping strategies, they also commonly internalized these serious pressures and turned to alcohol and drugs to cope with chronic stress, although not typically at problematic levels. We discuss study implications for both schools and families derived from the Expert Panel.

From centralized to distributed public service media: An analysis of market and public value-driven arguments

Abstract In recent years, various regulators and advisory bodies have advocated for distributed public service models or at least explored its validity. This article aims to analyse the arguments for stepping away from centralized to distributed PSM systems. It questions whether proposals for distributed offers envisage distributed PSM as a complement or as a replacement of existing PSM organizations, whether motives are based on market failure or public interest objectives, how these underlying motives are transposed into specific policy plans and finally, to what extent they fit within a longer term strengthening of national media ecosystems or mainly serve to realize budget cuts and meet specific demands of private competitors. Findings are based on a literature study and an analysis of Flanders, United Kingdom, New Zealand and the Netherlands, in which debates on distributed PSM are recent or ongoing. The article argues that the efficiency and contestable funding arguments that underpin the advocacy for distributed public service are based on ideological market failure beliefs, similar to the ideological choice for centralized public service media. Debates on distributed models often go hand in hand with a desire to limit public service provision, or, a pragmatic stance of politicians seeking to please more than one player in the media market. An ecosystem logic that truly matches market with public interest objectives might therefore deserve a more fundamental exploration.

Compensation Benchmarking Practices in Large U.S. Local Governments

Growing competition over human capital has reiterated the importance of strategic practices to maintaining a high-quality public sector workforce. But how often does the public sector study pay and benefits among competitive peers? This study presents the findings of a national survey of human resource professionals regarding compensation benchmarking practices. Just over half of respondents indicated they conducted a benchmarking study within the last decade. A majority said their jurisdiction only compares compensation with other public employers, with a smaller number including both public and private competitors. Salaries were the most frequent topic of concern; fringe benefits and paid leave time were less often compared. Several jurisdictions conducted benchmarking studies for purposes other than compensation; about one quarter gathered data for purely informational purposes and 9% carried out a study in anticipation of labor negotiations. A series of best practices for benchmarking studies is offered in conclusion.

Sociopolitical determinants of international health policy.

For decades, two opposing logics have dominated the health policy debate: a comprehensive health care approach, with the 1978 Alma Ata Declaration as its cornerstone, and a private competition logic, emphasizing the role of the private sector. We present this debate and its influence on international health policies in the context of changing global economic and sociopolitical power relations in the second half of the last century. The neoliberal approach is illustrated with Chile's health sector reform in the 1980s and the Colombian reform since 1993. The comprehensive "public logic" is shown through the social insurance models in Costa Rica and in Brazil and through the national public health systems in Cuba since 1959 and in Nicaragua during the 1980s. These experiences emphasize that health care systems do not naturally gravitate toward greater fairness and efficiency, but require deliberate policy decisions.

The Return of Public Enterprise

Public enterprises never disappeared in spite of several privatization waves in the last three decades. This paper offers some trends and possible rationales for their resilience. In a sample of the Forbes 2000 top corporations, as reviewed by OECD economists (Kowalski et al. 2013), we show that the around ten per cent of state-owned enterprises perform better in financial terms than their private counterparts. The Great Recession has also shown that governments had to take over failing major private enterprises, including particularly banks. In several countries, particularly in Western Europe, there is municipalization of electricity and water distribution. In the EU/15, there is also evidence that in electricity and gas, government owned incumbents offer fairer prices to households than private competitors. Recent research on mergers and acquisitions confirms that in the last ten years there has been an increase of publicization relative to privatization, including through trans-border deals.

Analysis of Closed Real Estate Funds in Italy

In this paper, we examine closed real estate funds, comparing the Italian case with the international closed real estate fund market. We study whether the “public hand” has acted in an efficient market way to achieve return results in line with private competitors. In the last 10 years, international closed real estate funds have had an annual average of 0.5%. This result represents a very poor performance when compared with the returns offered by international bonds (5.6%) or international l equity markets (6.9%). This positive trend, however, is not followed by the closed real estate investment fund sponsored by the Italian government. On average, during the recent financial crisis, the returns of the international closed real estate funds in the euro area increased by more than 14 percentage points, while those of the Swiss franc area were about 1.5%.

Right Sourcing in Nebraska: Growing Government or Private Industry?

This study focuses government sourcing decisions in Nebraska, including the benefits and costs of government performance (insourcing) versus contracting with the private sector (outsourcing). The study generally concludes that government insourcing is likely to increase taxpayer costs and produce lower quality outcomes as compared to outsourcing to a competitive private sector provider. It also recommends changes in the assessment and evaluation of government activities to increase transparency and critical evaluation of potential savings from outsourcing whenever the government competes with the private sector.

W. E. B. DU BOIS AND THE CRITIQUE OF THE COMPETITIVE SOCIETY

AbstractThis essay explores W. E. B. Du Bois’s evolving sense of disillusionment with the liberal paradigm in an effort to stimulate critical thinking about an American political culture consumed by both the fear and purported legitimacy of private competition. Du Bois always encouraged sustained critical appraisal of an American society torn between winners and losers, the favored and the damned. As his thinking developed into the 1930s, he focused more squarely upon the logic of capital accumulation, or the structural imperative to expand power in the service of private interest, and always in response to a suspicion or fear of the other—the competitor. I suggest that Du Bois’s claims about the racially biased character of the competitive society, as well as his argument, put forth in a series of speeches and writings on “Negro education,” that Black colleges ought to facilitate the critique of this society, may have some normative import today as widespread, often unreflective acquiescence to the principles of competitive liberalism seems poised to exacerbate and further legitimize racial and economic inequities.

How to Throw the Baby out with the Bath Water. A Few Remarks on the Currently Accepted Scope of Civil Liability for Antitrust Damages

The Damages Directive introduces the right to ‘full compensation’ and the principle of ‘joint and several liability’ for antitrust damages (Article 3(1) and Article 11(1) respectively). The Directive does not determine the type of damage that can be awarded in civil proceedings. In theory, there are thus no barriers to establish punitive, multiple or other damages. In practice, it is rather unlikely that such types of damages will be awarded after the implementation of the Directive due to the ban placed on overcompensation in its Article 2(3). This paper will try to decode the concept of ‘full compensation’ and ‘joint and several liability’ in light of the Damages Directive as well as EU jurisprudence. An adequate understanding of these terms is without a doubt one of the key preconditions of correctly implementing the Directive and, consequently, a condition for making EU (competition) law effective. While on the one hand, a limitation of the personal scope of civil liability can currently be observed in EU law (covering both legislation and case law), a broadening of its subject-matter scope is visible on the other hand. With reference to the personal scope of civil liability, the Directive itself limits the applicability of the joint and several responsibility principle towards certain categories of infringers: small & medium enterprises (Article 11(2)) and immunity recipients in leniency (Article 11(3)). Considering the subject-matter scope of civil liability, the acceptance by the Court of Justice of civil liability for the ‘price umbrella effect’ should be highlighted. In addition, the principle of the ‘passing-on defence’ can also be regarded as a manner of broadening the scope of civil liability for antitrust damage (Article 12–16). The paper will present an overview of the scope of civil liability for antitrust damages (in its personal and subject-matter dimension) in light of the Directive and EU jurisprudence. The paper’s goal is to assess if the applicable scope will in fact guarantee the effective development of private competition law enforcement in EU Member States. This assessment, as the very title of this paper suggests, will be partially critical.

Who Does What in Competition Law: Harmonizing the Rules on Damages for Infringements of the EU Competition Rules?

After a long preparatory process, a Directive harmonizing certain national rules on private enforcement of competition law has been adopted by the European Parliament. In this contribution it is investigated whether harmonization of these rules was desirable and whether the main objectives of the directive, the improvement of the possibilities for victims to obtain damages and of the interaction between public and private competition, are likely to be achieved. With regard to the aim of increasing the possibilities for victims of antitrust infringements to obtain compensation, we can conclude that the Directive indeed increases this possibility, although various obstacles to private action are likely to remain. This includes obstacles in relation to (lacking) possibilities for collective action, the requirement to prove negligence or intent, and rules on disclosure of evidence. With regard to the interaction of public and private enforcement of competition law a crucial issue is finding the right balance between using the leniency program (which the European Commission needs in order to be able to effectively trace cartels) in the public enforcement of competition law and compensating victims via enforcement of private law. Whether the Directive has chosen the most desirable option to achieve this balance is debatable.

Public Private Partnership Contracts Financing by Covered Bonds

1. Introduction Sovereign entities of the western world rely the provision of public services (defense, public health, education, public infrastructures etc.), when tax revenues are not adequate, to a large extent on the financing through a considerable amount of unsecured public debt via issuance of unsecured senior bonds. In that way, by running controllable and scheduled public deficits, they can meet the needs of the general government extra financing as well as the required financing of public investments, and public services. On the other end, the States traditionally have on their considerable amounts of real assets (real estate and related infrastructures, as well as monopoly companies and special resources monopolies), many of them being potentially income generating assets. Recent experience has shown that, the government is not always the best manager of its on balance sheet real assets, let alone the managing of its public debt obligations. Also it is widely accepted that the private sector is usually more efficient in pricing, developing, managing and operating business (and therefore managing the related risks) in a competitive environment, with limited resources. As a consequence, Public Private Partnerships evolved as an alternative form of asset exploitation, between governments and competitive private companies, where each of the two partners brings to the contract its comparative advantages, in order to make the final partnership viable and profitable for both participants. Such structures that efficiently exploit assets and monopoly structures of the government through appropriate management from private sector companies, produce efficiently public services and manage to their full income generating potential, public assets, utilizing therefore the public property with private sector competitive standards. The appropriate pricing of the expected cash flows of the contract from both sides, taking into consideration all the possible aspects of the project is very important for the negotiation process, and selection of the preferred private partner. Optimal pricing and efficient selection of the private entity are significant parameters for contract's viability and profitability for all related parties. Once a PPP is initiated on an existing asset or an asset to be built and run by a private company, this contract is the base of a stream of future expected cash flows, as well as residual value, and subject to many kinds of pricing risks, having an overall net present value as any other real income generating asset, priced in the market. Thus far, using the example of many European countries, the issuance of public debt for the financing of government deficits was by the issuance of senior unsecured bonds. In case of default or partial default of the issuer country, the investors have full recourse against the assets of the issuer but only on theory. In practice investors will experience a loss in interest income or redemption amount or even both, depending on restructuring type. After the Global financial crisis of 2007-2008 the market has shifted its focus in more efficient pricing of default risk and especially in pricing the Sovereign default risk, of many heavily indebted countries, including Greece among others. The subsequent result was a general widening of yield levels of many sovereigns and in many cases in levels where the traditional market channel of funding became unavailable to the State. Sovereign States were in the midst of a crisis where due to the economic downturn, fiscal consolidation was needed while public investments and services needed also a boost in order to compensate for the deterioration of private investments and consumption, and all these in an environment with higher credit spreads, less liquidity and more risk averse investors. On the side of these, as history has shown, the private sector, and especially private banks in many countries around the world, were able in similar situations, of credit squeezes and illiquid markets, to refinance their balance sheet by the issuance of covered bond schemes, achieving market acceptability and substantially lower cost of funding, when the senior unsecured debt was prohibitively expensive for them to consider. …

Demand-Invariant Price Relationships and Market Outcomes in Competitive Private Commons

We introduce a private commons model that consists of network providers who serve a fixed primary demand and strategically price to improve their revenues from an additional secondary demand. For general forms of secondary demand, we establish the existence and uniqueness of two characteristic prices: the break-even price and the market sharing price. We show that the market sharing price is always greater than the break-even price, leading to a price interval in which a provider is both profitable and willing to share the demand. Making use of this result, we give insight into the nature of market outcomes.

Effects of Characteristics of Nigerian Students on Perceived Satisfaction of Academic Facilities in Private Universities in Ogun State, Nigeria

Students' retention amongst the competitive private Universities in Nigeria leads to issues of students' satisfaction which is relatively sparse in literature. This study thereby examined the relationship between selected students' characteristics (sex, age, year of study and type of sponsorship) on the students’ satisfaction in three (3) private Universities in Ado - Odo Local Government Council, Ogun State, Nigeria. A total of four hundred and thirty two (432) questionnaires, representing 76% of the sample size, were used for analysis. The result of the analysis using cross-tabulation, Mann-whitney U Test and Krustal Wallis showed that there is no close relationship between sex, age, year of study and type of sponsorship and satisfaction with academic facilities in the Universities. However, this result is not totally conclusive, particularly for Covenant University, as further analysis revealed that mode of sponsorship is significant. Further research is thereby advocated.Key words: Students' Characteristics, Satisfaction, Academic, Facilities, Private Universities, Nigeria

Optimal Risk Allocation in the Provision of Local Public Services: Can a Private Insurer be Better Than a Federal Relief Fund?

We study the institutional solutions needed in a decentralized framework to cope with the potential adverse welfare effects caused by localized negative shocks, that impact on the provision of public services and that can be limited by precautionary investments. We consider first a public relief fund to cover these ‘collective risks’. We analyse the underinvestment problem stemming from the moral hazard of Local administrations, when investments are defined at the local level and are not observable by the Central government that manages the relief fund. We then examine the potential role of private insurers in solving the underinvestment problem. Our analysis shows that the public fund is almost always a better institutional arrangement with respect to the private insurance solution, but competitive private insurers can improve social welfare in the presence of Central government’s soft budget constraints problems, especially when the number of Local administrations is large. (JEL codes: H23, H77, G22).

An Integrated Risk Assessment Model for the Implementation of Drought Insurance Markets in Spain

Water is a key input in the production of many goods and services and under certain conditions can become a critical limiting factor with significant impacts on regional development. This is the case of many agricultural European Mediterranean basins, where water deficit during drought events is partially covered by illegal abstractions, mostly from aquifers, which are tolerated by the authorities. Groundwater overexploitation for irrigation has created in these areas an unprecedented environmental catastrophe that threatens ecosystems sustainability, urban water supply and the current model of development. Market-based drought insurance systems have the potential to introduce the necessary incentives to reduce overexploitation during drought events and remove the high costs of the drought indemnity paid by the government. This paper develops a methodology to obtain the optimum risk premium based on concatenated stochastic models. The methodology is applied to the agricultural district of Campo de Cartagena (Segura River Basin, Spain). Results show that the prices in a hypothetic competitive private drought insurance market would be reasonable and the expected environmental outcomes significant.

The Role of Private Enforcement within EU Competition Law

Private enforcement is an increasingly prominent and important aspect of EU competition law. The impending Directive on damages actions aims to strengthen and, to a degree, harmonise procedures for private competition litigation, while recent cases of the Court of Justice have consistently reaffirmed the centrality of the right to claim competition for losses stemming from breach of the competition rules. Moreover, this right has been presented as an essentially unitary one, whereby any victim of any type of competition infringement has, in principle, the right to claim damages. This article reviews the evolving framework, and considers, specifically, the role for private enforcement within the overall system of EU competition law. Taking into account the Commission’s efforts to facilitate and increase private enforcement, the emerging EU public enforcement framework, as well as the substantive EU competition rules more generally, this article argues that, contrary to the rhetoric, private enforcement is a mechanism best adapted, and arguably most appropriate, for use only in the context of hard-core cartels. It is further suggested that the gap between rhetoric and reality is not problematic as such, yet difficulties may arise insofar as these divergences conflict with the principle of effectiveness.

Contexts Matter

This study examines public school characteristics, and public and private school market characteristics, associated with participation among elementary-aged students in a means-tested school voucher program in Florida. Participants are more likely than eligible nonparticipants to come from disadvantaged public schools on multiple dimensions. On average, participants’ public schools have lower aggregate student achievement, and higher rates of disciplinary incidents. Participants’ schools receive less positive ratings on various measures from principals and teachers. Participants face more competitive private school markets, and less competitive public school markets, than do nonparticipants. When these factors are considered together, the mean achievement and disciplinary incident rate of students’ own public schools, as well as public and private school market variables, independently predict voucher use.

Privatising The Swedish Welfare State

AbstractThe introduction of private competition and choice in the Swedish welfare sector has attracted widespread attention in recent years. This paper sets out the factors that helped make this development possible, and explains why the influence of the organisational theory of New Public Management (NPM) has ensured that while market economy elements have increased in welfare services, the scope of the state and the public sector has continued to grow. The result is the emergence of welfare quasi‐markets, which are increasingly subject to input‐related regulation and control.

Ethics, Market, and the Federal Order. The Political Philosophy of Wilhelm Röpke

Abstract The moral and political philosophy of Wilhelm Röpke is among the finest instances of European classical liberalism in the twentieth century, and in many occasions he stated that only a society which understands the importance of markets can be reconciled with human dignity. Röpke elaborated a political theory that focused on the harmony between moral principles and economic law. In this sense, his liberalism is unique not only because it defends private property and competition as pillars of a thriving economy, but above all that it provides the preconditions of a society that can remain secure from the immorality of despotism and subsequent ethical degeneration. To that end he upheld an economic order based on voluntary cooperation as the basis for a more humane society, emphasizing the role of institutional competition and federalism. Röpke’s cultural conservatism should not therefore be misunderstood, as it is very much connected with his defense of the essential role of property. It is only in this sense that he found in liberal humanism a third way, which is not however situated halfway between the market and socialism, but which represents instead a defense of a competitive society that is aware of its own historical and cultural basis.