Liberalization-Privatization Paths: Policies and Politics

Abstract: We empirically investigate the political determinants of deregulation policies in 23 OECD network industries over 1975-2007. We unbundle privatization and liberalization and find, despite conventional wisdom, that both right-wing and left-wing governments liberalize and privatize network industries. However, right-wing executives tend to privatize more and to liberalize less, relative to left-wing governments. Thus, contrary to previous literature, ideological cleavages affect the ‘structure’ of deregulation, i.e. the way in which liberalization and privatization are combined, rather than its ‘level’. This result may shed new lights on the analysis of the political determinants of market-oriented policy.