Franchising and Privatization
Increasing private sector participation to improve the efficiency of infrastructure services is a growing trend around the world. Some elements of most infrastructure activities exhibit "natural monopoly" characteristics, meaning that one...
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| Format: | Viewpoint |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/1995/03/697564/franchising-privatization http://hdl.handle.net/10986/11677 |
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okr-10986-116772021-06-14T11:04:23Z Franchising and Privatization Dnes, Antony W. DENATIONALIZATION INFRASTRUCTURE CONTRACTS MONOPOLIES MARKET COMPETITION FRANCHISE BIDDING NATURAL MONOPOLIES BIDDING COMPETITIVE MARKETS CONSUMERS ELECTRICITY GENERATION EVALUATED PRICE FRANCHISE INEFFICIENCY LEGISLATION MARKET COMPETITION NATURAL MONOPOLIES NATURAL MONOPOLY POLITICAL ECONOMY PRIVATE SECTOR PARTICIPATION REGULATORS SALES SUPPLIERS WELFARE ECONOMICS Increasing private sector participation to improve the efficiency of infrastructure services is a growing trend around the world. Some elements of most infrastructure activities exhibit "natural monopoly" characteristics, meaning that one or more services or products can be produced most cheaply by a single firm. This raises the issues of organizing an infrastructure industry so as to gain the advantages of production by a single firm, without encouraging monopolistic conduct. This Note discusses a franchise approach to problems of natural monopoly--franchise bidding schemes--proposed by Sir Edwin Chadwick, a Victorian social reformer and later promoted by Harold Demsetz in the United States. The essential idea is that monopoly franchises could be auctioned off to the bidder offering the most attractive terms. Competition through bidding ensures minimum selling prices because the winning franchise will lower prices until revenues just cover costs. Franchise schemes also may avoid pitfalls associated with traditional regulation of such industries or with their nationalization. The Note also discusses the advantages of a franchise system and the importance of contract design to a successful franchise system. 2012-08-13T15:42:16Z 2012-08-13T15:42:16Z 1995-03 http://documents.worldbank.org/curated/en/1995/03/697564/franchising-privatization Viewpoint. -- Note No. 40 (March 1995) http://hdl.handle.net/10986/11677 English Viewpoint CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Viewpoint Publications & Research |
| repository_type |
Digital Repository |
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Foreign Institution |
| institution |
Digital Repositories |
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World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
DENATIONALIZATION INFRASTRUCTURE CONTRACTS MONOPOLIES MARKET COMPETITION FRANCHISE BIDDING NATURAL MONOPOLIES BIDDING COMPETITIVE MARKETS CONSUMERS ELECTRICITY GENERATION EVALUATED PRICE FRANCHISE INEFFICIENCY LEGISLATION MARKET COMPETITION NATURAL MONOPOLIES NATURAL MONOPOLY POLITICAL ECONOMY PRIVATE SECTOR PARTICIPATION REGULATORS SALES SUPPLIERS WELFARE ECONOMICS |
| spellingShingle |
DENATIONALIZATION INFRASTRUCTURE CONTRACTS MONOPOLIES MARKET COMPETITION FRANCHISE BIDDING NATURAL MONOPOLIES BIDDING COMPETITIVE MARKETS CONSUMERS ELECTRICITY GENERATION EVALUATED PRICE FRANCHISE INEFFICIENCY LEGISLATION MARKET COMPETITION NATURAL MONOPOLIES NATURAL MONOPOLY POLITICAL ECONOMY PRIVATE SECTOR PARTICIPATION REGULATORS SALES SUPPLIERS WELFARE ECONOMICS Dnes, Antony W. Franchising and Privatization |
| relation |
Viewpoint |
| description |
Increasing private sector participation
to improve the efficiency of infrastructure services is a
growing trend around the world. Some elements of most
infrastructure activities exhibit "natural
monopoly" characteristics, meaning that one or more
services or products can be produced most cheaply by a
single firm. This raises the issues of organizing an
infrastructure industry so as to gain the advantages of
production by a single firm, without encouraging
monopolistic conduct. This Note discusses a franchise
approach to problems of natural monopoly--franchise bidding
schemes--proposed by Sir Edwin Chadwick, a Victorian social
reformer and later promoted by Harold Demsetz in the United
States. The essential idea is that monopoly franchises could
be auctioned off to the bidder offering the most attractive
terms. Competition through bidding ensures minimum selling
prices because the winning franchise will lower prices until
revenues just cover costs. Franchise schemes also may avoid
pitfalls associated with traditional regulation of such
industries or with their nationalization. The Note also
discusses the advantages of a franchise system and the
importance of contract design to a successful franchise system. |
| format |
Publications & Research :: Viewpoint |
| author |
Dnes, Antony W. |
| author_facet |
Dnes, Antony W. |
| author_sort |
Dnes, Antony W. |
| title |
Franchising and Privatization |
| title_short |
Franchising and Privatization |
| title_full |
Franchising and Privatization |
| title_fullStr |
Franchising and Privatization |
| title_full_unstemmed |
Franchising and Privatization |
| title_sort |
franchising and privatization |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/1995/03/697564/franchising-privatization http://hdl.handle.net/10986/11677 |
| _version_ |
1764417602669510656 |