Discussion of Dr Labra’s Paper

  • William J. Baumol
Part of the International Economic Association Series book series (IEA)

Abstract

Mr Stoffaes listed three environments in which public enterprises had a role to play: (i) in industrialised capitalist countries, (ii) in planned economies, and (iii) in less developed capitalist countries. Differences in these environments have to be considered if a reliable judgement is to be made about the efficiency of these enterprises. In advanced capitalist countries the role of public enterprises was marginal, serving only to impose some checks and balances upon the market. Typically they covered industries which were natural monopolies, public services, or areas where substantial externalities caused market failures. They also were sometimes used to maintain employment (for example in the British coal, steel, shipbuilding or automobile industries), to promote regional balance (such as in the industrialisation of Southern Italy), and to encourage investment in new and risky, high-technology industries (e.g. the electronics, nuclear and aerospace industries in France). Alternatives to public enterprises in developed capitalist countries were the regulation of private monopolies, or subsidies, and investment premiums to private companies. There was not sufficient empirical evidence to favour one instrument over the other, at least from the point of view of economic theory.

Keywords

Transportation Expense Egypt Argentina Monopoly 

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Copyright information

© International Economic Association 1980

Authors and Affiliations

  • William J. Baumol

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