ABSTRACT
Public enterprises present elements of monopoly not only in developing countries but in developed countries also. However, certain aspects relating to the former merit special notice. This chapter suggests policy measures that are appropriate to deal with the situation. Monopoly elements are most obvious where, in a given sector, a single public enterprise operates – e.g. Bharat Heavy Electricals Ltd. in India. Rigorous analysis may be initiated of the economies of scale in respect of the existing large enterprises, so that, even if the apex is allowed to remain, the constituent units are reorganised so as to prevent scale diseconomies through excessive largeness. Attempts to exorcise the consequences of monopoly power in public enterprise should be considered a part of the strategy to improve international competitiveness of the developing countries. The need for such a strategy is ubiquitous indeed. There is another good result of effective monopoly control over public enterprises in a mixed economy.
