Disentangling Liberalization and Privatization Policies: Is There a Political Trade-Off?

Abstract

We empirically investigate the political determinants of liberalization and privatization policies in six network industries of 30 OECD countries. We unbundle liberalization and privatization reforms and study their simultaneous determination in a two-equation model. Our findings unveil that both right-wing and left-wing governments implement liberalizations and privatizations, showing a common trend under the so-called neo-liberalism wave. However, although the privatization rate is higher than liberalization in right-wing environments, the opposite occurs under left-wing governments. We conclude that different deregulation patterns should be expected under governments characterized by different political ideologies.

Keywords: Liberalization, Privatization, Network industries, Partisanship

JEL Classification: D72, L50, P16, C33