Rail Privatisation: The Economic Theory

The purpose of this paper is to examine the relevance of economic theory to the rail privatisation proposals contained in the Railways Act 1993. After a review of the latest rail privatisation literature four major themes emerged: (1) Contestability and Barriers to Entry. (2) Franchising. (3) Vertical Integration. (4) Horizontal Integration. Following a short review of the rail privatisation proposals the paper presents each theme in the context of the proposals. In conclusion, we highlight a number of future issues which will require monitoring and research in the future. In particular, we identify a number of hypotheses, put forward by both those in favour and against the Government's proposals, that should be tested

Privatization in Economic Theory

In reality privatization has never occurred according to the handbook rules of ordinary market transactions. Not even in advanced market economies can privatization transactions be described by the Walrasian or Arrowian, or Leontiefian equilibrium models, or by the equilibrium models of the game theory. In these economies transactions of privatization take place in a fairly organic way which means that those are driven by the dominance of private property rights and in a market economy. But despite this fact Western privatization also some peculiar features as compared to ordinary company takeovers, since the state as the seller may pursue non economic goals. Changes in the dominant form of property change positions and status of many individuals and groups in the society. Thats why privatization can even less be explained by ordinary market mechanisms in transition countries where privatizing state-owned property have happened in a mass scale and where markets and private property rights weren't established at the time process of privatization began. In this paper Ill discuss and analyze the phenomenon of privatization in context of different economic theories, arguing that empirical results go in favor of the public choice theory (Buchanan, 1978), theory of economic constitution (Brennan and Buchanan, 1985), (Buchanan and Tullock, 1989), and theory of collective action (Olson, 1982). These theories argues that transition from one economic system into another, for example transition from collectivistic, socialistic system into capitalism and free market economy with dominant private property, will not happen through isolated changes of only few economic institutions, no matter how deep that changes would be. In other words privatization can not give results if it's not followed by comprehensive change of economic system, because privatized companied wouldn't be able to operate in old environment.Private property rights, Privatization, Transaction, Institutions, Transition

The Suitability Rule and Economic Theory

The published rules of both the National Association of Securities Dealers (NASD) and the Securities and Exchange Commission (SEC) provide that a broker or dealer in the securities market may recommend the purchase of a security only when there is a reasonable basis for believing that the security is suitable for the customer

Taxing Stock Dividends and Economic Theory

Since 1936, the Internal Revenue Code has treated elective stock dividends on common stock, which are taxed on receipt as shareholder ordinary income gain, differently from pro rata stock dividends on common, which are received tax-free. This difference in treatment was reenacted in Section 305 of the 1954 Code; and while the Tax Reform Act of 1969 changed many details of stock dividend taxation, the basic distinction between elective and pro rata stock dividends was, if anything, reinforced. The major purpose of the 1969 amendments to Section 305 was to impose a shareholder ordinary income tax on transactions with the same substance, but lacking the formal indicia, of the receipt of elective stock dividends on common stock. Therefore, a reexamination of the rationale for current distinctions between taxable and nontaxable stock dividends is particularly appropriate

Economic Crisis and Economic Theory

Two dynamic general equilibrium economies compete in explain?ing the United States'interwar business cycles. Despite the demand driven contender's slight advantages, the results remain too close to call a clear winner.Great Depression, Dynamic General Equilibrium.

An economic theory of GATT

GATT;economic theory