The Welfare Impact of a Privatization: The British Telecom Case-History
Università degli Studi di Milano Dipartimento di economia politica e aziendale working paper n.08.2001
38 Pages Posted: 21 Feb 2003
Date Written: June 2001
In this paper we offer and discuss new evidence on the performance of British Telecom before and after privatisation. We use a unique dataset based on company accounts over forty years (1960-1999), and original additional company data on several variables. We focus particularly on output, prices, revenues, costs, employment, productivity, profits and investments. Our key-finding is that operative profits were remarkably stable before and after divestiture, and that ownership change per se had little discernible impact on productivity trends, particularly between 1984-1991. Major changes in performance after 1991 were however related to variations in financial arrangements, competition and regulatory pressure. This allows us to look at the BT case history as a natural experiment on the relative importance of privatisation, liberalization, and regulation.
JEL Classification: L32, L33, L5, M54
Suggested Citation: Suggested Citation