In Europe privatization was scaled at macroeconomic level, reaching France and
the UK in the 1990s. In 1986 Italy adhered to this policy, followed by Spain and
Germany in 1993. During the 1979–1999 timeframe, in Europe privatization
changed the microeconomic environment because it empowered the private sector
in its relation with the state, and to this we can add the technological advance which
eliminated most of the monopolies on the market.
Technological advance was also empowered by telecom and energy sectors, to
which we could state that information technology largely neutralized natural monopolies and streamlined oligopolistic positions by increasing allocation efficiency.
Modern man-made monopolies are seen through nationalization of companies,
similar to TARP in 2009 (Bodislav 2013a), or the process of nationwide nationalization in Hungary between 2015 and 2018. In the case of oligopoly, we have the
evolution of shaping a market by mimicking oligopolies by using companies created
through technological advance. In 1984 there was AT&T as example which later on
was sliced in smaller companies in the idea of reducing costs and redeveloping the
sector of the economy. In the cases of monopolies and oligopolies, there were stateowned companies that don’t have as main goal to create profits, because they have
the option to work at a loss that isn’t always a negative component because it fulfills
the goal of the public sector (Bodislav 2014). The entity operates by using the price
¼ marginal cost principle; fixed costs are sunken costs and are covered from the
public budget and by using the allocation efficiency principle.
9.2 Regulating Markets: Advanced Economic Issues
Adam Smith’s Wealth of Nations highlights the idea of regulation by using the many
advantages that a seller could have in his relation with the buyers (Smith, 2011). In
the 1970s Stigler achieved the idea that regulation creates two macro-ideas: it helps
reallocate wealth and increase costs with waste in the economy, and this way interest
groups will want higher regulations from the government and will try to mimic how
a public good works, but meanwhile they’ll try to shift the new regulations toward
their benefit. Stigler (1971) highlighted that if the state empowers the industrial
sector, the marginal benefit of that industry decreases and the entire sector
underperforms. Politicians are the main driver when it comes to developing regulations, but not with the purpose of deceasing market imperfections, but to serve the
needs of interest groups that offer them some benefits for their service (support for
reelection – financial, expertise, or moral). Stigler has seen regulation as a complicated mechanism used for profit by quantifying the interest group’s needs (Anderson
1998). The advancement in telecom and energy technology starting with the early
twentieth century was in line with actual monopolies in the late twentieth century
and the beginning of the twenty-first century (Zajicek 1999). AT&T and Chicago
Commonwealth Edison included as supervisor the American government and
pushed regulations through their policies, but not for empowering the benefits for
the consumer but for transforming themselves in long-run monopolies. This
146
D.-A. Bodislav et al.
the UK in the 1990s. In 1986 Italy adhered to this policy, followed by Spain and
Germany in 1993. During the 1979–1999 timeframe, in Europe privatization
changed the microeconomic environment because it empowered the private sector
in its relation with the state, and to this we can add the technological advance which
eliminated most of the monopolies on the market.
Technological advance was also empowered by telecom and energy sectors, to
which we could state that information technology largely neutralized natural monopolies and streamlined oligopolistic positions by increasing allocation efficiency.
Modern man-made monopolies are seen through nationalization of companies,
similar to TARP in 2009 (Bodislav 2013a), or the process of nationwide nationalization in Hungary between 2015 and 2018. In the case of oligopoly, we have the
evolution of shaping a market by mimicking oligopolies by using companies created
through technological advance. In 1984 there was AT&T as example which later on
was sliced in smaller companies in the idea of reducing costs and redeveloping the
sector of the economy. In the cases of monopolies and oligopolies, there were stateowned companies that don’t have as main goal to create profits, because they have
the option to work at a loss that isn’t always a negative component because it fulfills
the goal of the public sector (Bodislav 2014). The entity operates by using the price
¼ marginal cost principle; fixed costs are sunken costs and are covered from the
public budget and by using the allocation efficiency principle.
9.2 Regulating Markets: Advanced Economic Issues
Adam Smith’s Wealth of Nations highlights the idea of regulation by using the many
advantages that a seller could have in his relation with the buyers (Smith, 2011). In
the 1970s Stigler achieved the idea that regulation creates two macro-ideas: it helps
reallocate wealth and increase costs with waste in the economy, and this way interest
groups will want higher regulations from the government and will try to mimic how
a public good works, but meanwhile they’ll try to shift the new regulations toward
their benefit. Stigler (1971) highlighted that if the state empowers the industrial
sector, the marginal benefit of that industry decreases and the entire sector
underperforms. Politicians are the main driver when it comes to developing regulations, but not with the purpose of deceasing market imperfections, but to serve the
needs of interest groups that offer them some benefits for their service (support for
reelection – financial, expertise, or moral). Stigler has seen regulation as a complicated mechanism used for profit by quantifying the interest group’s needs (Anderson
1998). The advancement in telecom and energy technology starting with the early
twentieth century was in line with actual monopolies in the late twentieth century
and the beginning of the twenty-first century (Zajicek 1999). AT&T and Chicago
Commonwealth Edison included as supervisor the American government and
pushed regulations through their policies, but not for empowering the benefits for
the consumer but for transforming themselves in long-run monopolies. This
146
D.-A. Bodislav et al.