The Janus Face of Europeanisation: Explaining Cross-Sectoral Differences in Public Utilities

Abstract

Although policymakers have sought to liberalise network-based utilities, a more detailed look at privatisation pathways reveals remarkable sector-specific differences. This article examines why efforts to privatise public utilities have differed so greatly in the telecommunications, postal, and railway sectors. By estimating probit models, it is demonstrated that firm characteristics and sector-specific EU integration account for cross-sectoral differences in privatisation. More specifically, governments dispose of the most efficient firms first to maximise revenues from privatisation sales with low political costs. Regulations at the European level pushed governments to privatise their national postal providers, while privatisation in the telecommunications sector is a global trend. In the railway sector, exceptional clauses and regulations have decelerated privatisation.

Notes

1. Australia, Austria, Belgium, Canada, Denmark, Finland, France, Greece, Germany, Ireland, Italy, Japan, the Netherlands, Norway, New Zealand, Portugal, Spain, Sweden, Switzerland, the United Kingdom, United States.

2. The results for the substantive variables do not differ from those reported.

3. Some countries, such as the UK and New Zealand, have at least partly revoked their privatisation decision.

4. Dummies account for the most important sector-specific EU legislation. The dummy equals 1 in the year of adoption of a certain legislation and in the years after the adoption and when a company is operating in an EU member country. The following legislation has been included: the Green Paper in 1987 (COM/87/290) that promoted the liberalisation of the telecommunication market and directive 96/19/EC concerning the implementation of full competition of telecommunications and networks by 1998.

5. One reason for the early privatisations in non-European countries might be that the PTT system has no tradition in non-European countries and governments did not have to disentangle the administrative organised postal and telecommunications services first when privatising telecommunications services.

6. It might be countered that technological progress in the telecommunications sector is responsible for the differences across sectors. Apart from the problem of measuring sector-specific technological advance, I argue that technological progress is a preceding variable, influencing the firm’s efficiency rather than directly altering the likelihood of privatisation. Nevertheless, I estimated the models including dummies for the most important innovations which, however, do not influence the probability of the company’s divestment.