Economic Analysis on Privatization of Special Corporations and Public Corporations

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In this study, we analyze issues related to the privatization of government-affiliated special corporations and public corporations. The specific purposes of this study are 1) to evaluate the results of privatization, 2) to make clear factors leading to privatization, 3) to obtain policy knowledge and lessons from privatization. The main industries which we analyze in this study are 1) the railway industry, 2) road businesses, 3) the postal service industry, and 4) public utility industries such as bus service industries which comprise both public corporations and government-affiliated special corporations. We take the following steps in this study: 1) a survey of previous studies and an initial analysis, 2) data collection and the construction of a data base, 3) analysis by econometric models and recollection of extra data sets, and 4) model construction and a policy analysis. In 2004, we analyzed mainly the postal service industry and the railway industry. In 2005, we focused on the … More analysis of the postal service industry and road business. In 2006, the final year of this study, we performed an analysis of road businesses, other public corporations, and government-affiliated special corporations. All results obtained in this study have been summarized in academic papers, which we have been presenting at conferences and submitting to academic refereed journals in Japan and overseas.The main results provided in this study are summarized as follows. First, the universal supply (USO) cost in the postal service industry attains around 17% to total revenues. Even if the privatization of postal services is accomplished, the USO cost still remains about 13% to total revenues. In addition to privatization, it is inevitable that the Post Office be reorganized if better performance is to be accomplished. Second, based on results from econometric analysis of the Japanese National Railways privatization, TFP growth after privatization was annually 2.97%, with privatization raising TFP growth by 1.62% annually. Furthermore, over-capitalization at the former JNR has been corrected by privatization. In the road business, public infrastructure such as roads contributes to an increase in private productivity. As for the privatization of the highway public corporations, there remains a problem in the method of vertical separation. Last, as for factors affecting privatization decisions of public corporations, the marketability factor is the most important. The existence of more than two regulators also affects privatization decisions. When there are more than two competent authorities (regulators), the possibility of privatization decreases. Less