Private Sector Competition Research Articles

Interests, Wireless Technology, and Institutional Change: From Government Monopoly to Regulated Competition in Indian Telecommunications

This paper explores the causes behind the institutional change that promoted regulated private-sector competition in India's booming telecommunications sector. This change occurred incrementally by resolving conflicts of interest driven by the twin engines of fiscal crisis and technological change in cellular telephony. The Prime Minister's Office and the Ministry of Finance pushed for the change, whereas the Department of Telecommunications resisted it. As private participation succeeded, the relationship between the private sector and government financial organizations made a significant impact on parts of the government that favored change. Cellular technology offered the private sector with a first-mover's advantage because it had gambled on it when government-owned corporations had ignored its commercial potential. Evolutionary change occurred through a process of institutional layering that involved establishing new institutions along the edges of old ones and allowing them to grow differentially. The pace of institutional change accelerated in times of financial crises when the mismatch between policy intention and institutions led to a withdrawal of private investment.

Foreign ownership, technological capabilities and clothing exports in Sri Lanka

Drawing on recent developments in applied international trade and innovation and learning in developing countries, this paper examines the links between firm-level export performance, foreign ownership and the acquisition of technological capabilities in a sample of 205 clothing enterprises in Sri Lanka. Econometric analysis indicates that foreign ownership, firm size, human capital, technological capabilities and geographical location are all positively associated with export shares. Furthermore, higher levels of technological capability are associated with larger firm size, university-level manpower and in-house technological effort. Micro-level investigations are a complementary input to developing policies for promoting private sector competitiveness in outward-oriented developing countries.

Public versus private health care in a national health service

This paper studies the interaction between public and private health care provision in a National Health Service (NHS), with free public care and costly private care. The health authority decides whether or not to allow private provision and sets the public sector remuneration. The physicians allocate their time (effort) in the public and (if allowed) in the private sector based on the public wage income and the private sector profits. We show that allowing physician dual practice 'crowds out' public provision, and results in lower overall health care provision. While the health authority can mitigate this effect by offering a higher wage, we find that a ban on dual practice is more efficient if private sector competition is weak and public and private care are sufficiently close substitutes. On the other hand, if private sector competition is sufficiently tough, a mixed system, with physician dual practice, is always preferable to a pure NHS system.

Public Versus Private Health Care in a National Health Service

This paper studies the interaction between public and private health care provision in a National Health Service (NHS), with free public care and costly private care. The health authority decides whether or not to allow private provision and sets the public sector remuneration. The physicians allocate their time (effort) in the public and (if allowed) in the private sector based on the public wage income and the private sector profits. We show that allowing physician dual practice crowds out public provision, and results in lower overall health care provision. While the health authority can mitigate this effect by offering a higher wage, we find that a ban on dual practice is more efficient if private sector competition is weak and public and private care are sufficiently close substitutes. On the other hand, if private sector competition is sufficiently hard, a mixed system, with physician dual practice, is always preferable to a pure NHS system.

A Framework for Analyzing Network Governance of Public Assets

This paper provides a framework for evaluating the strengths and weaknesses of public assets owned by: (i) The State, (ii) A State owned corporatized body, (iii) Private investors or (iv) By a network of constituents. A basis is presented for analysing these four governance architectures based on their (i) Accountability, (ii) Quality of service, (iii) Operating costs, (iv) Funding (v) Cost of finance, and (vi) Political outcomes. Network governance augments and/or replaces the centralized communication and control of the other three alternatives with distributed: communications, intelligence, decision making, and control to prodigiously reduce information overload and bounded rationality that can facilitate more dynamic, efficient and effective operations. At the same time, network governance can improve the volume and integrity of information and control for detecting and correcting errors to improve economy, efficiency and effectiveness while enhancing self-regulation to minimize the dead weight cost of regulation and compliance. Other attractions of governance by a network of private sector constituents arises from: (i) No increase in government debt; (ii) Replacing Ministerial accountability with accountability by constituents to constituents; (iii) Enriching democracy by direct citizen participation; (iv) Changing the role of government from direct intervention to establishing the rules of the game for self-governance; (v) Increasing economy, efficiency and effectiveness by replacing private sector competition for control through markets and regulation with internal organizational competition for control among constituents with competing interests; (vi) Avoiding autocratic or plutocratic control of public assets by investors that undermines democracy and creates resentment. In these ways, network governance can reduce cynicism of politicians and government that can generate social alienation and disengagement.

Policy Reform, Economic Growth and the Digital Divide

Rapid growth of internet use in high-income economies has raised the spectre of a “digital divide” that will marginalize developing countries because they can neither afford internet access nor use it effectively when it is available. Using a new cross-country data set, this paper investigates two proximate determinants of the digital divide: internet intensity (internet subscriptions per telephone mainline); and access to telecom services. Surprisingly, no gap in internet intensity was found. When differences in urbanization and competition policy are controlled for, low-income countries have intensities as high as those of industrial countries. While income does not seem to matter in this context, competition policy matters a great deal. Low-income countries with high World Bank ratings for competition policy have significantly higher internet intensities. The paper's finding on internet intensity implies that the digital divide is not really new, but reflects a persistent gap in the availability of mainline telephone services. After identifying mobile telephones as a promising new platform for internet access, the paper uses panel data to study the determinants of mobile telephone diffusion during the past decade. The results show that income explains part of the diffusion lag for the poor countries, but they also highlight the critical role of policy. Developing countries whose policies promote economic growth and private sector competition have experienced much more rapid diffusion of mobile phone service. Simulations based on the econometric results suggest that feasible reforms could sharply narrow the digital divide during the next decade for many countries in Africa, Asia and Latin America.

Methodological Thoughts on Measuring the Impact of Private Sector Competition on the Educational Marketplace

Numerous researchers have speculated on and attempted to quantify the impact of policies designed to increase school choice and competition between schools, and they have reached widely differing conclusions. In this article, we provide an overview of the research that focuses on the potential achievement effects of greater private sector competition on K-12 schooling. In particular, we explore the various methodologies that have been used to assess the relative effectiveness of public and private schools. We discuss the strengths and shortcomings of different approaches, and based on this, we ponder what is known and not known about the impact of increased choice and competition. In conclusion, we maintain that although many of the methodologies used to assess the effects of particular interventions, such as educational vouchers, are sound, they likely fail to capture the general equilibrium consequences of enhanced choice. As a result, many of the questions we would want answered to inform policymaking remain unknown.

The Dismal Performance of Non-financial State-owned Corporations in Bangladesh

This essay provides an analysis of the financial performance of non-financial state-owned corporations in Bangladesh which are in financially decrepit conditions. The causes of the poor performance of state-owned corporations are identified. Their financial losses, poor performance, inefficiency and subsidization create pressure on the national exchequer, weaken the country's financial sector and reduce the competitiveness of the country's private sector. Feasible policy options to overcome the dismal performance of state-owned corporations in Bangladesh are discussed.

Best Practices for Encouraging Private Sector Investment and Competition in the Power Industry

This article identifies and recommends the “best practices” and specific steps that developing countries can take to encourage both private sector investment and competition in the power sector. It is based on a study done for the Asian Development Bank. Overall, the objective is to identify what that private sector participation can provide benefits to consumers of power. The five most important steps are: getting the investment framework right; deciding on the goals of restructuring and the ideal industry structure; preparing the players to participate in a competitive market; privatizing existing and new assets; ensuring that the competitive market is implemented properly.

Public/Private Competition in Solid Waste Management: A Case Study of Alternatives to Flow Control

Profound changes are occurring in municipal solid waste management as a result of the 1994 U.S. Supreme Court decision that struck down solid waste flow control ordinances. Local governments have scrambled to find alternatives to flow control in the face of increasing competition from private sector waste management firms. This article details the case of the Southeastern Public Service Authority's efforts to develop feasible alternatives to flow control and strategies for dealing with private sector competition in solid waste collection and disposal. These strategies may serve as a useful model for municipal solid waste agencies in the post-Carbone era.

Grade Creep in the Federal Service?

Why did the mean grade of federal white-collar workers rise 1.2 grades between 1977 and 1993? The author explores 4 possible explanations: (a) increasing complexity of federal work and increasing qualifications of federal workers; (b) declining discrimination against women and minorities; (c) responses to the underpayment of federal workers; and (4) grade creep, an inflation of grades without an accompanying rise in the difficulty and responsibility of the work. Based on analysis of a 1% sample of federal personnel records for 1976 and 1992, the author finds that rising qualifications and declining discrimination appear to be the main causes of the grade rise, though grade creep also seems to play a part. Rising grades do not seem to be a response to private-sector competition in high-pay metropolitan areas.

The limits of competition: Housing insurance in Switzerland

In Switzerland there are seven cantons where the housing insurance market is competitive, while in the 19 others there are local state monopolies. This paper compares the price/performance relationship of these different market forms. It is shown that for a very similar product the state monopolies charge 70% lower prices, that they spend substantially more on fire prevention, and that they have much lower damage rates. One of the main reasons for the higher prices of the private insurance companies is the fact that they spend considerably more on sales and administrative costs. The housing insurance market is thus a classic example of a situation where state monopoly outperforms private sector competition.

The French breast cancer screening programme: Epidemiological and economic results of the first round of screening

This paper presents the epidemiological and economic results pertaining to the first round of breast cancer screening programmes in France. Breast cancer screening is based within existing radiologic facilities in the private and public sector and on-going competition exists between organized and spontaneous screening. The mean screening attendance rate was 36.7%, the mean recall rate was 10.4%, the positive predictive value (PPV) for the screening test 5.8% and the biopsy rate 1.2%. There were 5.1 carcinomas detected per 1,000 women screened. Of these, 30.7% were smaller than 10 mm in diameter and 69.0% had no nodal involvement. A retrospective resource-based cost analysis revealed a mean cost of US$63 per woman screened. This cost includes all direct programme costs excluding diagnostic testing and treatment costs. Organizational as opposed to technical aspects of screening accounted for 38% of this cost in the first round. These results reveal discrepancies in the quality, cost and estimated efficacy between the district programmes during the first screening round. Overall, epidemiological indicators reach European target values, with the exception of a low PPV for both the screening test and biopsy. In addition to the strict adherence to quality control and interpretation protocols, the shift of French women away from individual screening practices towards organized screening behaviour will be necessary to enable the French breast cancer screening programmes to reach their optimal efficacy.

The limits of contractual order in public sector transacting

Contract is playing an increasingly important part in the restructuring of the public sector in Britain in the 1990s. The direct providing role of the state is being reduced through the ‘contracting out’ of ancillary and core services in the NHS, central and local government, whilst the policy aim of increasing the efficiency of public sector management involves contract in the operation of internal markets, the creation of specialist agencies with clearly defined functions and responsibilities, the devolution of financial responsibility to budget-holding business units operating in internal trading relationships, and the exposure of internal workforces to private sector competition through compulsory competitive tendering (CCT). However, the widespread adoption of a common ‘language of contract’ to describe processes occurring in these different contexts disguises a variety of meanings and functions.

Nuclear Power in the United Kingdom—the End of the Beginning?

Nuclear power is a young technology that has developed within a political environment of ever-changing priorities. In the United Kingdom, Government-led central planning of electricity supply has given way to market forces and the future of nuclear power depends on its ability to compete in this competitive environment as well as its wider public acceptance. In only three years, the disciplines of private sector competition have transformed the economics of United Kingdom nuclear operations and the new generation of pressurized water reactor (PWR) at Sizewell is set to lead the world in safety and performance. Taken together with the growing recognition of the need to protect the local and global environment from the products of the combustion of fossil fuels, the prospects for the future of nuclear power as the major clean energy source for the twenty-first century have never been better.

Intersectoral labor allocation on China's communes: A temporal-priority analysis

Strong private sector competition for labor has widely been held as a major cause of weak incentives for collective work on China's communes. This paper questions this thesis. A close examination of job assignment decision making under the commune reveals two constraints on members' collective sector allocation. Analysis of these shows a wide range of cases where members could be expected to give priority to performing collective operations. Observation of teams from one region supports this result, and confirms the claim made by many Chinese authors that the role of the private sector was complementary. The analysis also provides the basis for a critical examination of the current consensus.

Client and contractor roles in a changing local government environment

The advent of Compulsory Competitive Tendering (CCT)1 exposes large swathes of local authority services to private sector competition. The challenge facing those in local government who wish to protect in-house services is how to adjust to a new commercial contracting culture without losing the values of public service. The Audit Commission argues that such a culture requires a hard split between the Council as a client, who sets service standards and ensures value for money and its contractor side that concerns itself with performing to standard and price. This article looks at both the legal and operational impetus for such a client-contractor split, from a DSO (Direct Service Organisation) perspective, and examines the strategic issues raised for local authority reorganisation.

State Autonomy and the Crisis of Import Substitution

Import Substituting Industrialization (ISI) strategies that were instituted with great expectations in Latin America and elsewhere have not produced the desired results. Instead, ISI has been blamed for giving rise to inefficient economic structures and even for the emergence of Bureaucratic Authoritarian States. This article argues that the problems generally attributed to ISI are, in fact, due to a lack of state autonomy. What causes the loss of autonomy is the emergence of powerful and fiercely competing private sector interests intent on maximizing their share of “economic rents.” The resulting private sector-state dynamic hampers the formulation of long-term policies. The operation of this dynamic is demonstrated through a case study of Turkey in the 1970s, where the state, paralyzed by private sector competition, just witnessed the collapse of its political economy.

Managing the Freedom of Information Act and Federal Information Policy

The Department of Defense processed 83,173 FOIA requests in 1985; Health and Human Services had 105,687 requests, with 45,953 to the Food and Drug Administration; Treasury had 23,217 and the Department of Energy, 5,723. An estimated 91 percent of all requests were completely filled. Requests are wideranging. A research assistant at a California college and a newspaper reporter in Oregon asked the Department of Energy for detailed information on the Nuclear Emergency Search Team (NEST). A Maryland-based consulting firm asked the Navy for copies of procurement contracts. A Japanese firm in Kyobashi wanted a copy of an application for a drug dealing with antiarrythmia. An inmate in a mid-western prison asked the Army for instructions on making a bomb and advice on where to place it to blow up Denver. A hospital in Massachusetts requested a Quality Assurance Profile conducted by the FDA.' The management of FOIA and the way we think about information have both changed during the past 20 years. Government information in the 1980s has become a tangible commodity with a dollar value. Information Management is being defined as a multi-faceted process involving the collection, processing, storage, transmission, and use of Each facet is governed by different regulations. Businesses have become major requesters; submitters of information are seeking new protections for their data; the costs of providing information have been significantly higher than Congress anticipated. The Executive branch and a number of legislators are advocating that requesters pay for the records they receive as well as their value. For example, the proposed Senate bill to amend the FOIA (S.150) would permit agencies to charge a fair value fee or royalties for government records containing commercially valuable technological information. But there is little guidance on how to price the future value of Some argue that too much government information is being released harming government decision making and intelligence gathering as well as private sector competition. Others claim that access to government information is being sharply curtailed, damaging scientific exchange, research, and democratic processes. The focus of this discussion is the management of FOIA, but this is inextricably entwined in the larger question of information policy. The historical context out of which FOIA evolved is sketched first. Next, the way in which FOIA has been implemented and managed, is examined, with attention to how selected agencies have balanced the conflicting demands of Congress and the executive branch against their own goals