Regulation of Public vs. Private Companies, of Existing vs. New Firms

Note: Readers should cross-reference this section with Market Structure and Competition, Financial Analysis, Price Level Regulation and Regulatory Process for information on these issues as they relate to public enterprises.

Core References

Rationale for restructuring and regulation of a low priced public utility: a case study of Eskom in South Africa
International Journal of Regulation and Governance 3(2): 77-102.
Eberhard, A. and M. Mtepa

Uses the case of Eskom in South Africa to examine the rationale for reforming oversight of a publicly-owned operator. Examines issues of financial performance, price levels and trends, investment, labor costs, and incentives.

Some Options for Improving the Governance of State-Owned Electricity Utilities
The World Bank, Discussion Paper No. 11, February 2004.
Irwin, T. and C. Yamamoto

Examines performance issues in state-owned electricity distributors and suggests options for improving performance. Considers applying private-sector company law, legislation and contracts, public reporting, corporate culture, pressure from lenders, listing minority shares, and techniques for alleviating the government’s conflict of interest as owner and policy-maker.

Performance Evaluation for State-owned Enterprises
in Privatization and Control of State-owned Enterprises, edited by Ravi Ramamurti and Raymond Vernon. World Bank Economic Development Institute, 1991, pp. 179-205.
Jones, Leroy P.

Describes an approach for regulating state-owned enterprises. The approach consists of a performance evaluation system, a performance information system, and an incentive system.

Privatization, Restructuring, and Regulation of Network Industries
Cambridge, MA: MIT Press, 1999, Chapters 3 and 5.
Newbery, David M.

Compares incentives and performance of public versus private enterprises. States that public enterprises are subject to greater government control and so serve the interests of the government. Private enterprises respond to profit incentives and so are governed by incentive regulation. Empirical studies find that public enterprises have lower prices than private enterprises, but studies of cost differences are inconclusive. Liberalization is complicated by public enterprises.

Controlling State-owned Enterprises
in Privatization and Control of State-owned Enterprises, edited by Ravi Ramamurti and Raymond Vernon. World Bank Economic Development Institute, 1991, pp. 206-233.
Ramamurti, Ravi

Examines why state-owned enterprises have in general not been successful. Suggests a contracting system that could improve performance.

The Search for Remedies
in Privatization and Control of State-owned Enterprises, edited by Ravi Ramamurti and Raymond Vernon. World Bank Economic Development Institute, 1991, pp. 7-25, pp. 7-25.
Ramamurti, Ravi

Provides an overview of problems and possible solutions in privatizing and regulating state-owned enterprises.

Sectoral References


Review of the Gas Access Regime: Draft Report
Melbourne, Australia, 2003.
Productivity Commission of Australia

Examines the regulation of established systems versus “greenfield” systems.


Economic regulation and cost-efficiency in Brazilian urban public transport: the case of Belo Horizonte
Institute of Applied Economic Research, Brazil, 2004.
de Ávila, Gomide

Analyses the main outcomes and consequences of the bidding process for urban bus services in Belo Horizonte, Brazil, focusing on economic efficiency and changes in fares. Concludes that contracting out bus services does not necessarily ensure cost-efficiency in the absence of a well-devised competitive tendering process and an effective regulatory framework, and that more attention should be given to these considerations in the design of future bidding processes.

Best Methods of Railway Restructuring and Privatization
CFS Discussion Paper Series, number 11, World Bank, Washington, D.C., 1995.
Kopicki, Ron and Louis Thompson

Provides context and guidance to restructure the railways. Addresses distinct structural issues associated with rail enterprise reform, design of specialized intermediary institutions that carry out much of the work of railway restructuring, and management techniques that are appropriately adapted to railway reform and restructuring. Focuses on “best” methods built on seven case studies of recent railway restructuring efforts: Japan National Railway, New Zealand Railways, Argentina Railways, Swedish Railways, British Railways, and railroads in the United States, and Canadian Railways.

Launching Public Private Partnerships for Highways in Transition Economies
Transportation Paper series number 9, World Bank, Washington, D.C., 2005.
Queiroz, Cesar

Holds that there is a large potential for more private sector involvement in the financing and operation of highway assets in transition economies. Reviews potential applications of partial risk guarantees, the required legal framework (for example, concession law) for attracting private capital for PPP schemes, possible steps for a country to launch a program of private participation in highways, the concept of greenfield and road maintenance concession programs, and the treatment of unsolicited proposals.


Characteristics of Well-Performing Public Water Utilities
World Bank: Water Supply and Sanitation Working Notes. Note No. 9, May 2006.
Baietti, W. Kingdom, W. and van Ginneken, M.

Identifies attributes of well run public utilities and identifies important factors that influence their performance. It proposes a framework of assessing public utility governance: accountability, autonomy, customer orientation and market orientation.

Glas Cymru – harnessing the fundamentals of water service delivery
Regulatory Review, P. Vass, ed., Centre for Regulated Industries, Bath University, 2002/3.
Nigel Annett, Chris Jones, and Jeremy Liesner

Describes the strategy, operations, and financial make-up of Glas Cymru, a not-for-profit water operator in the U.K.

Investment and Uncertainty: Historical Experience with Power Sector Investment in South Africa and its Implications for Current Challenges
Working Paper, Management Program in Infrastructure Reform & Regulation, University of Cape Town Graduate School of Business, 2006.
Steyn, Grové

Key Words

Public enterprise, Private enterprise, State-owned enterprise, Competition, Liberalization