Services Liberalization Research Articles

Universal Service Regulation and Network Effects in Services of General Economic Interest in the European Union

The process of the liberalisation of services of general economic interest (SGEI) in the EU adopted the universal service (US) regulatory model. The objectives of the process were to strengthen free competition and improve social welfare. SGEIs have the characteristic of networked services and, as such, generate network externalities, as considered by the theory of market failures. This paper analyses the potential of the US in its role as a remedy for network externalities. In the SGEI context, the large number of participants reinforces network externalities, while limiting coordination mechanisms between users. Based on the relevant literature, a theoretical debate arises around the contribution of universal service obligations (USOs) to social welfare. A microeconomic analysis shows that USOs modify consumers’ utility functions by shifting from inefficient market equilibria to efficient equilibria, thereby improving social welfare.

Investigating the market share convergence and welfare potentials of asymmetric train access charges for the commercial passenger rail services

A recent market liberalisation of commercial passenger rail services since 2020 has brought a new era for long-distance transport in the EU. However, drawing from the experiences of countries with unsuccessful entry attempts, we investigate the effects of asymmetric train access charges (TAC). Asymmetric access regulation is based on lower access charges for entrants than for incumbents for a limited period in order to induce convergence of railway undertakings' (RU) market shares. Intending to compare the effects of symmetric and asymmetric TAC, we model oligopoly competition in the number of offered seats between the incumbent (Inoui) and entrant (Trenitalia) on the Paris–Lyon line, the first case of asymmetric TAC regulation on railways. In the first year of competition, consumer surplus, entrant's profit, and total welfare without infrastructure manager's profit increased with asymmetric TAC compared to symmetric TAC without discounts. As the discount for entrant diminishes over time, all previous welfare elements monotonically decline. By introducing new departures and running double trainsets, the entrant can reverse this monotonically declining trend. This implies that asymmetric TAC should provide additional incentives for entrants to increase their frequency and number of offered seats.

Does better regulatory institutions always enhance the productivity effects of services trade liberalization？

The majority of previous studies have asserted that the high quality of local institutions can improve the productivity effects of trade policies; yet, only a few studies have acknowledged the heterogeneous impact of these institutions. Using data from Chinese manufacturing plants, we examine the moderating effects of regional-level regulations on the effectiveness of national services trade policy. The key findings are threefold: First, as the initial degree of service liberalization advances, the productivity effect of trade liberalization diminishes. Second, opening access to foreign enterprises can substitute for pro-competitive regulatory reform. Regardless of whether the regulatory institutions related to administrative processes, law enforcement, and commercial service have improved, services trade liberalization can have significant productivity effects. Third, in contrast, when regulations to protect for local incumbents impose prohibitive costs for new entrants, the impact of services trade liberalization is highly contingent on local regulatory improvement. The confirmation that trade liberalization can potentially serve as an alternative measure for local regulation reform in Chinese context distinguishes this study from others.

Is Service Orientation Benefitting Manufacturing Exports from Low-Middle Income Countries? Firm-level Empirical Evidence from WBES Data

Servicification of manufacturing, generally understood as the increasing use of service inputs in the production process of goods, is often associated with high-income countries. Recent empirical research on servicification and its impact on manufacturing exports across low-middle income countries is, however, relatively scarce. The current article empirically tests the servicification for low-middle income countries using the World Bank Enterprise Survey (WBES) database over 2006–2021. A fixed effect model with country-sector-year fixed effects is used to study the impact of servicification on existing exporters (intensive margin), and a Logit model is estimated to determine the corresponding impact on the decision to export (extensive margin). While the positive influence of servicification on manufacturing exports is confirmed, different service categories (e.g., transport & communication, information & technology, research & development, legal, finance and related services) are found to play an essential role in determining the decision to enter the export market, while leaving a weaker impact on existing exporters. The findings suggest that increasing the use of different categories of service inputs may differently influence firm-level export behaviour. Liberalization of services, in the era of Industry 4.0, is expected to further enhance this interlinkage. These inevitable dynamics require preparations by firm-level decision-makers to benefit from the emerging opportunities.

Drivers and Limits of the Geoeconomic Turn in EU Infrastructure Policy

In recent years, the EU has increasingly applied state-interventionist practices to initiate and implement infrastructure policy projects. This stands in stark contrast to a phase of liberalization of infrastructure networks and services accompanying European integration and fiscal consolidation and infrastructure decay during the euro crisis. This article argues that the new state interventionism is strongly driven by the changing global constellation of a “new triad competition” where the EU is increasingly competing over infrastructures with the US and China. As a consequence, EU infrastructure policy undergoes a geoeconomic turn that aims to control transnational value chains and related political-economic spaces. Drawing on concepts of critical geography and international political economy, the article outlines the core features of this geoeconomic design logic of infrastructures and contrasts it with complementary or competing ones. The article substantiates these arguments by analyzing EU decision-making on two cases of high-tech infrastructure in the fields of communication and energy: the federated data infrastructure Gaia-X and the Hydrogen Strategy. Both cases provide evidence for the geoeconomic turn in EU infrastructure policy. Yet, the analysis also highlights that the turn is at times supported but also hampered by a capitalist logic that is reflected in the positioning of European and non-European businesses, as well as the EU’s reliance on private action. Furthermore, it illustrates that an ecological and a social-integrative design logic to key infrastructures are largely subordinated. The conclusions reflect on the discrepancy between the EU’s geoeconomic agenda and its less far-reaching implementation.

Service liberalization and productivity in high‐tech firms: Evidence from China

AbstractThis article studies the relationship between service liberalization and the productivity of high‐tech manufacturing. Examining the sudden relaxation of FDI regulation in several service sectors in China, this article finds that service liberalization improves high‐tech firms' TFP. The effect is greater in non‐SOEs, firms with a higher degree of service dependence, and firms located in regions with better institutional environments. Furthermore, after service liberalization, high‐tech firms of all sizes have more outsourcing service expenditures and spend less on intermediate inputs. Only large‐sized high‐tech firms increase their R&D expenditures to improve production efficiency.

PUBLIC POLICIES TO REDUCE SWITCHING COSTS LINKED TO MANDATORY ACCESS TO CERTAIN ELEMENTS OF THE POSTAL NETWORK IN THE EU AND THE EFFECTS OF THE RETENTION COSTS

Purpose: Our objective is to examine the switching costs that exist in the European postal service, where an ambitious process of opening up to competition has been carried out since 1997, as well as the different types of retention costs. Theoretical Framework: The theoretical framework is determined by the sectoral regulatory framework regarding the liberalization of services of general economic interest in the EU, the experience of postal operators in recent decades and the changes experienced in the demand for postal services in the current context of profound technological change in the field of communication. Design/Methodology/Approach: This research work is carried out through a systematic review of the relevant specialized literature, the study of the policy decisions adopted in the EU, the changes in the strategies of postal operators and the rigorous analysis of the evolution of the demand of the postal services in a context of rapid and profound change. Finding: Inadequate regulation of the access to some elements of postal infrastructure or services within the scope of the universal postal service, such as the postcode system, address database, post office boxes, delivery boxes, re-direction and retour to sender service, can generate switching costs and thus limiting competition, with negative effects on the consumer surplus and social welfare. Standardization and access to these elements may be regulated separately Research, Practical & Social Implications: This article proposes solutions to the technical functions of coordination between operators. Our proposals are in line with sectoral directives aimed at strengthening competition in the long term in the postal market. Originality/Value: A correct classification of the change costs applied to the liberalized postal service is made. Likewise, a classification of retention costs. We must underline the progress that our proposals represent to reduce the costs of switching to elements of the postal network whose access is mandatory.

Effects of foreign direct investment in services on input imports of manufacturing firms: Evidence from China

AbstractThis study investigates the causal effects of foreign direct investment (FDI) in services on the input imports of manufacturing firms. We exploit a plausibly exogenous policy of FDI liberalization in services in China to construct an instrumental variable for FDI in services and address endogeneity concerns. The results demonstrate that FDI in services positively impacts both the value and sophistication of input imports for manufacturing firms. Mechanism analysis reveals that FDI in services enhances firms' input imports through reductions in production costs, relief from financial constraints, and decreased remote coordination costs. The positive effects of FDI in services are particularly pronounced for firms with lower initial productivity and higher levels of human capital.

Services Liberalization and Manufacturing Employment Polarization: Evidence from Chinese Listed Manufacturing Firms

ABSTRACT Based on the panel data of Chinese listed manufacturing firms from 2012 to 2020, this article examines the impact of services liberalization on the polarization of manufacturing employment from the perspective of workers’ skill structure. The study results show services liberalization exacerbates the polarization of manufacturing employment primarily through equipment upgrades and cost reductions in manufacturing firms, which means that services liberalization leads to an increase in the proportion of high-skilled and low-skilled workers in manufacturing and a decrease in the proportion of middle-skilled workers. The heterogeneity test notes that services liberalization has a more substantial employment effect on private firms, central and west region firms, small- and medium-sized firms, and firms in high-skilled industries. Services liberalization leads to employment polarization for private firms, firms in the west and central region, small- and medium-sized firms, large-sized firms, firms in high-skilled industries, and firms in low- and medium-skilled industries. This article has implications for the synergy between services liberalization policies and employment growth policies.

The quality of banking services as a gateway to increase the competitiveness of banks

Global changes as a result of technology in the field of financial and banking activities have shown great competitive challenges as a result of the globalization of banking activity and the liberalization of banking financial services to take its challenges on the shoulders of banking activity to adapt to the changes and face the negative effects and take advantage of them to achieve their gains and it became necessary to work on the development of banking services and keep abreast of developments in this field to achieve the wishes of customers is one of the main entrances to increase and develop the competitiveness of banks

Assessing the economic impact of the single African air transport market: The case of Tanzania

Tanzania is one of the 21 (out of 54) African countries that are yet to ratify the Single African Air Transport Market (SAATM) launched in 2018 as the first project of the African Union's agenda 2063. SAATM aims to create a single unified air transport market for Africa thereby opening skies across the whole continent and aiding the economic integration agenda. Using the two-stage least squares estimator that is robust to endogeneity bias, this study empirically assesses the economic effects of liberalization of air services between Tanzania and other African countries. The results show that removing restrictions on designation, flight frequency, and capacity for air transport between Tanzania and other parts of Africa would lead to a rise in the number of air passengers. Specifically, the results suggest that between 2010 and 2018, routes linking Tanzania and other African countries that were governed by liberal bilateral air services agreements (BASAs) enjoyed slightly lower fares compared to routes governed by restrictive BASAs. The results also suggest that air travel demand is not very sensitive to fare implying that the increase in the flow of passengers by an average of 16.9% between 2010 and 2018 can be attributed to the enhancement in service quality (as measured by flight frequency), and increased competition resulting from the entry of new players or intensified competition among existing ones. The policy implication of this study might be the need for Tanzania to embrace the SAATM initiative.

Money, magic, and machines: International Telecommunication Union and liberalisation of telecommunications networks and services (1970s–1990s)

Abstract This paper studies the liberalisation of telecommunication networks and services in the last quarter of the twentieth century, focusing on the role that the International Telecommunication Union played in creating the material, normative and ideological foundations of the pro-market global telecommunications order.

Liberalization of Higher Education Services: Exploring the Prospects and Challenges Under the ‘Australia-Bangladesh Trade and Investment Framework Agreement’

This article examines the potential opportunities and challenges for the liberalization of higher education services between Australia and Bangladesh under their recently concluded ‘Trade and Investment Framework Agreement (TIFA)’. Given their complementary economic imperatives, there is strong potential for growth in bilateral trade and investment in higher education services. Australia with its advanced higher education system would benefit from investments in higher education sector in Bangladesh. Bangladesh with its impressive growth performance would require educated, skilled, and knowledge-based workforce to sustain its ongoing economic development. It would benefit from the stock of human resources endowed with the high-quality education and training provided and supplied by the advanced higher education institutions and investors of Australia. This article prescribes ways of promoting and deepening their bilateral economic integration through investing in higher education services, identifies niche areas for additional opportunities, and highlights barriers to be overcome to derive and maximize mutual benefits. Education service is one of the least committed sectors under GATS. Economic growth-oriented bilateral liberalization of trade and investment in higher education services between Australia and Bangladesh is likely to have wider domino effect on others to follow, thus serving as a stepping-stone towards the progressive liberalization of multilateral trade in services under the World Trade Organization (WTO). Higher Education, Trade in Services, Education Services, Liberalization, Australia, Bangladesh

Liberalization of the Health Sector and Fulfillment of the Right to Health: How does international law respond to this condition?

Liberalization in the health sector is one of the problems faced, not only by Indonesia, but also by various countries in Southeast Asia. This condition emerged as one of the impacts of the agreement of Southeast Asian countries in free trade, where services became part of the ASEAN Economic Community which in the end massively liberalized trade in services. However, in the health services sector, problems arise in Indonesia, both in terms of policies, governance, certification, and competency standards which are considered to be obstacles in efforts to liberalize trade in services, especially in the health sector. This study aims to analyze aspects of international law and human rights in the liberalization of health services.

Preferential Services Liberalization: The Case of the European Union and Federal States, written by Johanna Jacobsson

Preferential Services Liberalization: The Case of the European Union and Federal States, written by Johanna Jacobsson

Uloga države u posebnim okolnostima

The role of state administration and its public institutions in certain circumstances represents one of the most significant issues in the last twenty years following the serious security crisis caused by terrorist attacks in New York on 11 September 2001. The accent of public administration reforms was on efficiency and effectiveness of public institutions. Reforms were divided into deregulation and liberalization of public services, territorial decentralization, and regionalization with the strengthening of local government institutions and reform of central government administration. After the security crisis in 2001, financial crisis in 2008 and health crisis in 2020, the role of state institutions and public authorities in governing the state was redefined. The leading motives of general liberalization of public services, deregulation, and various forms of decentralization of public institutions abounded due to the new doctrinal approach of governmental organization. New strengthening of public authorities and public institutions became the new mainstream in the organization and functioning of the state. This paper analyzes how the role of the state can be modified due to the dynamics of social, political, and economic changes in society. New governmental reforms are contrary to earlier political and administrative measures, which include the strengthening of public institutions and concentration of public authorities. The government takes on a regulatory function in many aspects of social, political, and economic life. This situation leads to a new organization of the state, where public authorities take on a significant part of the responsibility to regulate various aspects of economic and social activities. At the focus of this paper will be how the dynamics of specific circumstances in society can affect the developing processes of the state and their public institutions. Those processes have economic, social, and political dimensions. The economic dimension includes regulatory measures on the market which contributes to development of the framework for economic development. The social dimension includes measures of social policy focused on improving the social position of citizens according to the economic development of society. The political dimension includes various aspects of security policy, with various protective measures in the community, which depends on the type of treatment for security of citizens.

The liberalisation of high-speed rail services in Spain: Ticket price in the Madrid–Barcelona corridor

Current EU regulations and initiatives aim to promote a series of structural changes within the rail sector to improve its efficiency and environmental sustainability. Thus, a liberalisation process has been implemented through the so-called "railway packages". In the case of Spain, in 2021 the Spanish state-owned railway infrastructure manager (ADIF) culminated a long and complex process, initiated in 2016, to replace the existing public monopoly with free market models. As a result, three different companies have signed a ten-year agreement on the provision of high-speed services on the Madrid-Barcelona route, Madrid-East and Madrid-South.By facilitating the entry of new competitors, a reduction of transport costs is expected, which will in turn reduce the charges paid by operating companies. This will benefit rail passengers. In fact, the Spanish high-speed rail network presents, in general terms, excess capacity and low levels of congestion, which makes it easier for new operators to access the infrastructure. Therefore, new rail services will increase by 65% the network's capacity, compared to pre-liberalisation scenario.Given the new highly competitive scenario, the prices and types of tickets are much more complex as they are highly influenced by numerous factors, including internal factors, external factors, competition among rail operators and strategic customers. However, an appropriate ticket-pricing strategy can not only attract more passengers but also improve revenue. Therefore, the main goal of this paper is to analyse the pricing strategy for High Speed Rail (HSR) services in the Madrid-Barcelona corridor, considering the competition among different rail operators.

The Concept of Methodology for Strategic Decision Making of Managers

Globalization of markets, intense competition and implementation of innovations require quick and appropriate strategic decisions made by managers. The traditional strategic planning process is outdated and ineffective. The principles of the Art of War by Sun Tzu combined with modern methods of multi-criteria decision making provide managers with guidance for appropriate and timely strategic decisions. The contribution of the article is in the development of a methodology concept for strategic managerial decision making.Strategic and tactical excellence is the key factor of a company's success. The article deals with the possibilities of implementing the ideas of the Art of War into strategic decision making of managers. When implemented appropriately, managers ensure prosperity of their businesses and employees as well as customer satisfaction. The presented methodology can be a guide mainly for managers of railway passenger operators who are facing a big challenge represented by the liberalization of transport services in the public interest in railway passenger transport.

The Role of Logistics in the Management of the Railway Rolling Stock Life Cycle

Abstract Every undertaking providing transport services in passenger rail transport must currently prepare for the liberalization of transport services operating under a public service obligation. Competition in the mentioned segment is expected to intensify. Rolling stock represents a significant cost item for railway operators. The management of the life cycle of railway rolling stock is a way to efficiently manage vehicles. Adequately chosen parameters that are monitored and evaluated during the life cycle of railway rolling stock are crucial to successful management. Logistics plays an important role in the railway vehicle life cycle management, which, when properly set up, represents a significant competitive advantage. All railway undertakings are facing challenging times due to the consequences of the COVID-19 pandemic and the energy crisis. Proper and effective railway rolling stock life cycle management will help them overcome current and future challenges.

Transport Market and Status of Rail Freight Transport in the Context of Liberalization of Services

The deregulation of the rail transport market in the EU aims to improve the quality of the provided services and increase the efficiency of operation. This effect should manifest itself by increasing the competitiveness of rail transport, but also help to maintain an ecologically favourable transport system. However, transport policy is different in individual countries and there are differences in how they approach the support of rail freight transport. The paper evaluates the position of freight transport on the liberalized market, the positives and negatives. The research deals with bottlenecks in rail transport and offers a way to support rail transport. It is based on the authors' own research. It uses the Delphi method and multicriteria analysis. The benefit is the proposal of three sets of packages with different impacts on strengthening the position of railway transport in the transport market. The first is focused on technological changes with minimal expenditure of financial costs at the national level. The second package concerns new technological procedures, interoperability, security, and charges for the use of infrastructure and information systems. The third represents the greatest effectiveness for increasing the performance of bottlenecks in rail freight transport.