The risk of privatizing the telecommunications sector in Brazil

Abstract

This paper discusses policies of privatisation towards the telecommunications
sector in Brazil. It raises some issues connected to the impact of these policies and presents
some characteristics of an econometric/computational model which can be used to analyse
such an impact. It argues that, in the light of the international experience, the adoption of
privatisation policies, in general, is necessary but not sufficient. If detailed statistical analyses
in respect to the industrial structure of the sectors involved are not properly carried out,
it is likely that privatisation could not bring about expected efficiency gains. This argument
is based on the recent contributions to the theory of natural monopolies of the modem
multi product industries.

JEL Classification: L33; L96.