Table Of ContentPUBLIC AND PRIVATE ENTERPRISE IN A
MIXED ECONOMY
INTERNATIONAL ECONOMIC ASSOCIATION PUBLICATIONS
Monopoly and Competition and their Regulation
The Economic Consequences of the Size of Nations
The Theory of Capital
Inflation
The Economics ofTake-o!Tinto Sustained Growth
International Trade Theory in a Developing World
The Theory of Interest Rates
The Economics of Education
Problems in Economic Development
Price Formation in Various Economies
The Distribution of National Income
Risk and Uncertainty
Economic Problems of Agriculture in Industrial Societies
International Economic Relations
Backward Areas in Advanced Countries
Public Economics
Economic Development in South Asia
North American and Western European Economic Policies
Planning and Market Relations
The Gap Between Rich and Poor Nations
Latin America in the International Economy
Models of Economic Growth
Science and Technology in Economic Growth
Allocation under Uncertainty
Transport and the Urban Environment
The Economics of Health and Medical Care
The Management of Water Quality and the Environment
Agriculture Policy in Developing Countries
The Economic Development of Bangladesh
Economic Factors in Population Growth
Classics in the Theory of Public Finance
Methods of Long-term Planning and Forecasting
Economic Integration
The Economics of Public Services
The Organisation and Retrieval of Economic Knowledge
The Microeconomic Foundations of Macroeconomics
Economic Relations between East and West
Econometric Contributions to Public Policy
Appropriate Technologies for Third World Development
Economic Growth and Resources (5 volumes)
Public and Private
Enterprise in a Mixed
Economy
Proceedings of a Conference held by the
International Economic Association
in Mexico City
EDITED BY
WILLIAM J. BAUMOL
M
© International Economic Association 1980
Softcover reprint of the hardcover 1st edition 1980978-0-333-28319-6
All rights reserved. No part of this publication may be
reproduced or transmitted, in any form or by any means,
without permission
First published 1980 by
THE MACMILLAN PRESS LTD
London and Basingstoke
Companies and representatives
throughout the world
Typeset in Great Britain by
PINTAIL STUDIOS LTD
Ringwood, Hampshire
British Library Cataloguing in Publication Data
Public and private enterprise in a mixed economy
(International Economic Association. Symposia)
l. Industry and state - Congresses
2. Government business enterprises - Congresses
I. Baumol, William Jack II. Series
338.7 HD36ll
ISBN 978-1-349-16396-0 ISBN 978-1-349-16394-6 (eBook)
DOI 10.1007/978-1-349-16394-6
Contents
List ofP articipants vii
Introduction William J. Baumol ix
THE ISSUES
Public or Private Enterprise-The Issues to be Considered
Nicholas Kaldor 1
Discussion 13
PART ONE LESS DEVELOPED COUNTRIES AND THE ROLE OF
PUBLIC ENTERPRISE
2 Development Planning in a Mixed Economy T. N. Srinivasan 17
Discussion 32
3 Public Enterprise in an Underdeveloped and Dependent Economy
Armando Labra 36
Discussion 41
4 Some Considerations on the Role of Public Enterprise
Emilio Sacristan Roy 44
Discussion 53
5 Design of a Development Policy for Mexico: Industry and Oil
Ernesto Marcos 57
Discussion 66
PART TWO PRIVATE AND PUBLIC ENTERPRISE: EXPERIENCE
IN VARIOUS COUNTRIES
6 Market Structure and Market Organisation in the Electricity and
Gas Public Utility Sector of the FRG
Hans K. Schneider and Walter Schulz 71
Discussion 93
7 Public Enterprise and Advanced Planning Techniques: The
Experience of Electricite de France Marcel Boiteux 97
Discussion 112
vi Contents
8 Thoughts on the Role of Public Holdings in Developing Economies:
INI's Experience in Spain Tomas Galan 116
Discussion 135
9 The State Holding System in Italian Economic Development
V. Ajmone Marsan 138
Discussion 158
10 Enterprises in Hungary Before and After the Economic Reform
Rezso Nyers and Marton Tardos 161
Discussion 194
11 The Efficiency of Public Enterprise: Lessons of the French Experience
Pierre Dreyfus 198
Discussion 208
PART THREE: STUDIES OF RELATIVE EFFICIENCY
12 Public Enterprise in Practice: The British Experience of
Nationalisation During the Past Decade Richard Pryke 215
Discussion 230
13 Incentives, Efficiency and Social Control: The Case of the Kibbutz
Haim Barkai 233
Discussion 250
14 Comparative Costs of Public and Private Enterprise in a Municipal
Service E. S. Savas 253
Discussion 265
PART FOUR TOWARD POLICY
15 The Rate of Growth ofReal Wages and the Role of the State in the
Economy Antonio Sacristan Colas 273
Discussion 284
16 Actual and Potential Pricing Practices under Public and Private
Operation William S. Vickrey 286
Discussion 297
CONCLUDING COMMENTS
17 On the Implications of the Conference Discussions
WilliamJ. Baumol 300
Index 305
List of Participants
M. Michel Felix Albert, Chef adjoint du Service des Etudes Economiques
Generales, Direction Generate, Electricite de France
Professor Benito Acosta, Research Professor, CIDE, Mexico
Professor Armando Arancibia, Research Professor, CIDE, Mexico
Mr Tulio Arroyo, Instituto Politedinico Nacional, UPIICSA/SEGI, Mexico
Professor Haim Barkai, Professor of Economics, Hebrew University, Jerusalem
Professor William J. Baumol, Professor of Economics, Princeton and
New York Universities, USA
M. Marcel Boiteux, Directeur General, Electricite de France
Dr Jose Casar, CIDE, Mexico
Mrs Mercedes Salcedo Chavez, Conasupo, Mexico
M. Pierre Dreyfus, Ancien President et Directeur General de Ia Regie Renault
Mr Eibenschutz, CIDE, Mexico
Mrs Carmen Espinoza, CIDE, Mexico
Professor Luc Fauvel, Secretary General, International Economic Association
Professor Dietrich Fischer, Department of Economics, New York University
Dr Tomas Galan, Director of Planning, lnstituto Nacional de Industria, Madrid
Mrs Elma Gonzalez, CIDE, Mexico
Professor Oscar Gonzalez, CIDE, Mexico
Professor Luis Gutierrez, Research Professor, CIDE, Mexico
Professor Lord Kaldor, King's College, Cambridge, UK
Dr Rodrigo Keller, Director of Studies, Instituto Nacional de Industria, Madrid
Dr Armando Labra, President of the Collegio Nacional de Economistas,
Mexico
Professor David Levhari, Department of Economics, Hebrew University,
Jerusalem
Mr Manzuilletes, CIDE, Mexico
Dr Ernesto Marcos, Director de Coordinaci6n de Industria Paraestatal
Secretaria de Patrimonio y Fomento Industrial, Mexico
Dr V. Ajmone Marsan, Director of Economic Studies, Instituto per Ia
Ricostruzione Industriale (IRI), Rome
Lie Trinidad Martinez-Tarrag6, Director of Studies, CIDE, Mexico
Professor Isaac Minian, Research Professor, CIDE, Mexico
Mrs lfigeniai Navarrete, CIDE, Mexico
viii List of Participants
Dr Rezso Nyers, Director of the Institute of Economics of Hungarian
Academy of Sciences
Professor Bernardo Palomera, Research Professor, CIDE, Mexico
Dr Richard Pryke, Department of Economics, University of Liverpool, UK
Dr Antonio Sacristan Colas, President of CIDE, Mexico
Lie Emilio Sacristan Roy, Director Adjunto de Empresas y Fideicomiso de
N acional Financiera, Mexico
Mr Sanchez, CIDE, Mexico
Professor E. S. Savas, Professor of Public Systems Management and Director,
Center for Government Studies, Graduate School of Business, Columbia
University, NY, USA
Professor Hans K. Schneider, Direktor, Energiewirtschaftliches Institut,
University of Cologne, FRG
Professor T. N. Srinivasan, Indian Statistical Institute, Delhi, and Special
Adviser, Development Research Center, World Bank, Washington, USA
Mr Christian Stoffaes, Assistant to the Director General oflndustry,
Department oflndustry, Paris, France
Dr Marton M. Tardos, Head of Department, Institute for Economic and
Market Research, Budapest, Hungary
Carlos Tello, ex-Secretary of the Secretaria de Programacion y Presupuesto,
Mexico
Professor Pedro Uribe, Research Professor, CIDE, Mexico
Professor William Vickrey, McVickar Professor Political Economy, Columbia
University, NY, USA
Professor Pedro Vuskovic, Research Professor, CIDE, Mexico
Observer
Mr Peter Ruof, Program Officer, International Division, European and
International Affairs, the Ford Foundation, New York, USA
Introduction
William J. Baumol
PRINCETON AND NEW YORK UNIVERSITIES
This volume reports the discussion at a conference held in Mexico City in
January 1978. A conference on the role of public and private enterprise in
mixed economies was first proposed to the International Economic Association
by Lord Kaldor. A distinctive feature of any meeting devoted to this subject is
the absence of any large body of theory or empirical evidence on which the
discussions can be based. Thus, unlike many other conferences sponsored by
the lEA, we could not hope to start from an accepted analytic base well known
to all the participants. The conference could not hope to take stock of any
systematic body of knowledge and devote itself to exploration of the most
felicitous directions for its augmentation. Our work, then, had to devote itself
to an earlier phase of the analysis of our topic-the determination of the issues
and the hypotheses to which future research could usefully address itself. Our
agenda, then, was the preparation of an agenda for future students of the
subject.
In saying this I should not imply that the functioning of public and private
enterprise is entirely terra incognita. There exist both theoretical and empirical
materials of high quality that relate to the subject and that in some cases go to
the heart of the matter. For example, there is an extensive literature on optimal
pricing and investment policies for nationalised firms, almost all of it
dominated by the pathbreaking work of Marcel Boiteux. There is also some
systematic empirical work on the performance of public and private enterprise
in particular industries or particular geographic areas. Here, the work of
E. S. Savas and Richard Pryke is particularly noteworthy. Finally, there is a
body of experience, of knowledge derived by observation in the course of
managerial activities, which is waiting to be brought together and organised. In
short, the conference dealt with an area about which considerable knowledge
has been accumulated, but it seems never to have been brought together and
shaped into a coherent body of analysis. Part of the task of the conference,
then, was preliminary exploration of this body of information to estimate its
