SERVICE OLIGOPOLIES AND AUSTRALIA'S ECONOMY-WIDE PERFORMANCE

Rodney Tyers and Lucy Rees

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: The retreat from public ownership of service firms and industries has left behind numerous private monopolies and oligopolies supervised by regulatory agencies. Services industries in government and private ownership generate two-thirds of Australia’s value added, while the newly privatised ones, utilities, telecommunications, finance and transport, supply a fifth. This study offers an economy-wide approach that represents monopoly and oligopoly behaviour explicitly. It examines the implications of oligopoly rents for factor markets and the real exchange rate, the extent of sectoral interactions and the potential economy wide gains from tighter price cap regulation, with the results confirming the merit of an economy-wide approach. External shocks, like the present “China boom”, are also simulated. Such positive shocks are shown to expand the potential for oligopoly rents and therefore to raise the bar for regulatory agencies. Moreover, less than tight price caps are shown to exacerbate entry-exit hysteresis in boom and bust cycles.

JEL-codes: C68 D43 D58 L13 L43 L51 L80 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2008-03
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Service Oligopolies and Australia's Economy-Wide Performance (2015)
Working Paper: Service Oligopolies and Australia’s Economy-Wide Performance (2014)
Working Paper: Service Oligopolies and Australia's Economy-Wide Performance (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2008-05

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