Paulo Furquim de Azevedo

Private Operation with Public Supervision: Evidence of Hybrid Modes of Governance in Prisons

Received theories suggest a possible cost-quality tradeoff when private outsourcing arrangements are used in public services. Using data from Brazilian prisons, our study provides evidence that contradicts this prediction: the prisons not only run at a lower cost, but also show similar or improved performance on a range of quality indicators. The attenuation of the cost-quality dilemma in our context is due to the hybrid management, which allocates control rights to a state-appointed public supervisor. We also discuss conditions in which the public supervisor may refrain from colluding with the private agent, therefore guaranteeing an effective monitoring of service quality.

The Modes of Provision of Prison Services in a Comparative Perspective

This paper aims to compare the performance of two modes of provision of prison services: public, and with the participation of private companies. There are few empirical studies concerning the alternative modes of governance in this sector, which differs from other public utilities in that there is an absence of network externalities and scale economies. In addition, an understanding of informal institutions is crucial for the performance of the service provider, either public or private. In this paper, we build a comparative analysis of two case studies of similar correctional facilities, one public and the other outsourced to a private company under the supervision of civil servants (hybrid governance structure), both located in the same region of Brazil. We found that the privately operated facility has achieved better performance indicators (in terms of number of escapes, riots, deaths, assistance to inmates etc.) than the public facility, which in part refutes the arguments of Hart, Shleifer and Vishny (1997) against private participation in prison services. We conclude that the reasons for these differences are related to lower levels of administrative controls; to the presence of civil servants within the privately operated prison, which contributes to reducing information asymmetries; to greater incentives for the private operator: to monitor employees, to bypass local judiciary constraints and to fulfill contractual obligations.

Allocation of Authority in Franchise Chains

This paper investigates the determinants of the allocation of formal and real authority in franchise chains. Differences in business features, such as the required standardization and monitoring costs, explain the allocation of authority between the franchisor and franchisees. These variables affect the trade-off between the risk of brand name loss and the gains in knowledge sharing and learning within the network. The higher the need for standardization, the higher the risk of brand name loss, and, consequently, the more likely the franchisor is to adopt an organizational design that confers more control over the decisions of franchisees, such as business format franchising. This paper presents an empirical analysis of 223 franchise chains that provides support to the hypothesis of a negative effect of the required standardization on the level of delegation.This paper investigates the determinants of the allocation of formal and real authority in franchise chains. Differences in business features, such as the required standardization and monitoring costs, explain the allocation of authority between the franchisor and franchisees. These variables affect the trade-off between the risk of brand name loss and the gains in knowledge sharing and learning within the network. The higher the need for standardization, the higher the risk of brand name loss, and, consequently, the more likely the franchisor is to adopt an organizational design that confers more control over the decisions of franchisees, such as business format franchising. This paper presents an empirical analysis of 223 franchise chains that provides support to the hypothesis of a negative effect of the required standardization on the level of delegation.

Separação entre propriedade e decisão de gestão nas cooperativas agropecuárias brasileiras

A visao predominante na teoria economica e que organizacoes de propriedade difusa e complexas apresentam melhor desempenho se forem separados os direitos ao lucro residual das decisoes de gestao. Nos paises de economia desenvolvida, os modelos de governanca corporativa das cooperativas agropecuarias de propriedade difusa e complexas, tal como ja informado pela literatura economica, promovem a desvinculacao dos cooperados da gestao da empresa. Em contraposicao, no Brasil, embora nao haja estudos sistematicos sobre o tema, evidencias pontuais indicam que essas organizacoes concentram a propriedade e decisoes de gestao. A possivel divergencia entre os modelos de governanca utilizados nos diferentes paises revela a necessidade de mensuracao do grau de separacao entre propriedade e decisao de gestao em cooperativas agropecuarias brasileiras, tarefa a que se dedica este artigo. A partir de dados coletados junto a 77 cooperativas agropecuarias, identificou-se que diferentes modelos de governanca coexistem no Brasil. Embora grande parcela de cooperativas tenha governanca concentrada, ha um grupo que ja adota modelos de governanca que promovem a separacao parcial de jure ou de facto entre propriedade e decisao de gestao. Esses resultados revelam a necessidade de pesquisas futuras voltadas a identificar os determinantes da variabilidade de modelos de governanca nas cooperativas brasileiras.....Contract and Organizational theories establish that complex organizations with diffuse ownership, such as agriculture cooperatives, should benefit from the separation of ownership and decision control. In developed economies, such as the USA and Canada, these organizations, aligned with the theoretical proposition, adopt governance models that promote the separation of ownership and decision rights. However, in Brazil, despite the lack ofquantitative studies that measure governance separation, anecdotal evidence suggests that ownership and decisions rights are concentrated in Brazilian cooperatives. By means of a survey with 77 Brazilian agricultural cooperatives, this paper measures the degree of de jure and de facto separation of ownership and decision control, providing new evidences on the governance models observed in different countries. Different models coexist in Brazil, i.e., although the majority of agricultural cooperatives concentrate ownership and decision rights, a significant proportion organize themselves consistently with the theoretical proposition, adopting the American models of agricultural cooperatives. Further research is required in order to address the determinants of the variety of governance models in Brazil.

Desafios da agroindústria canavieira no Brasil pós-desregulamentação: uma análise das capacidades tecnológicas

This paper aims to appraise the technological capabilities (LALL concept, 1992) of Brazilian sugarcane agroindustry for a sample of three leading production states: Sao Paulo, Parana and Minas Gerais. A field research survey with sugar and ethanol mills provides the primary data for assessing technological capabilities (39%, 40% and 35% of the units in Sao Paulo, Minas Gerais and Parana State, respectively, answered, which means approximately 32% of national production of sugarcane, sugar and ethanol). As a main finding, the sugarcane agroindustry, technically qualified and with low costs, presents an expressive domain of simple routine and adaptive duplicative technological capabilities. However, the advanced technological capabilities (innovative risky) are still lagging behind the technological frontier, especially in the innovation process and in the R&D.

Concorrencia e Estrategias de Precificacao no Sistema Agroindustrial do Leite

This article aims to evaluate the degree of competition in the dairy industry, in the relevant markets of Ultra High Temperature (UHT) milk and pasteurized milk, by means of price transmission and marketing margin behavior. The empirical analysis is based on the model formerly proposed by Houck (1977) and latter detailed by Carman and Sexton (2005).This model analyzes separately the effects of input price increases and reductions on consumer prices, allowing for estimations of price transmission and margin behavior. Cepea-USP and Fipe provide, respectively, weekly input prices and consumer prices, both for the period of December 1999 to December 2005. As a major result, the degree of competition in the UHT relevant market was found to be robustly different from the pasteurized milk market. Whereas in the first price transmission corroborates the hypothesis of competitive market, in the pasteurized milk market there is evidence of imperfections both in price transmission and margin behavior. The outstanding increase of UHT milk consumption has fostered competition and liquidity in the dairy industry and milk distribution, allowing for faster price transmission throughout the production chain. Nevertheless fixed markup pricing found in the UHT relevant market shows that dairy industry and milk distribution have some degree of market power so as nominal changes in input prices are passed through consumers in a larger magnitude.

Governance Inseparability in Franchising: Multi-case Study in France and Brazil

The literature on franchising relies largely on the analysis of the transaction between franchisor and franchisees, sometimes also including company-owned outlets in the same investigation. This paper argues that the appropriate design of franchise contracts depends not only on the features of the transaction between franchisor and franchisees, but also on other transactions undertaken by the franchisor, particularly in upstream contracts, a hypothesis known as ‘governance inseparability’. Moreover, certain institutional environment features that affect the choice of governance mechanisms in the supply chain may indirectly influence the design of franchise contracts. In order to examine this hypothesis, this paper presents a discrete structural analysis of 21 case-studies of food franchises in France and Brazil. The cases compare franchise chains in each country that share similar business features — e.g. McDonalds’ operations in France and Brazil — in an attempt to control variables related to product and franchisors’ strategies. The main findings are that: a) firms choose a portfolio of governance mechanisms to govern their set of transactions; b) upstream and downstream governance mechanisms are complementary; and c) quality regulation and competition policy restrain upstream governance mechanisms, having an indirect effect on the design of the franchise contracts.

Geração de energia elétrica excedente no setor sucroalcooleiro: um estudo a partir das usinas paulistas

The generation of electric energy by the sugarcane sector stands much below its potential. Using five case studies with Sao Paulo plants, this article aims to identify the obstacles to the expansion of the electric energy commercialization by the sugarcane sector. High costs associated to the commercialization of electric energy - in commercialization of excesses, and in the acquisition for proper consumption – are the most reasonable explanation for the self-sufficiency in the production of electric power by the sugarcane sector, an allied energy to the small generation of excesses of energy for commercialization. Out of the five plants studied, three plants that commercialize energy excesses make it as part of a strategy of anticipation of the future need of self-sufficiency. Having associated costs for sale of excesses of electric energy, they do not have incentives to the use of technologies of higher energy efficiency. The public policy directed to the expansion of energy excesses must turn toward the reduction of the costs associated to the commercialization thereof. Particularly interesting it would be to increase the volume of free consumers and to support the commercialization between these and the co-generators of energy.

Elasticidade-preço da demanda por etanol no Brasil: como renda e preços relativos explicam diferenças entre estados

This article analyzes the demand for ethanol in Brazil, from 2001 to 2009, taking into account regional differences in regard of relative price and per capita income. These elements explain significant variability of demand elasticities across regions, a result not yet addressed by the related literature. By means of a panel with monthly data at the state level, we estimate an econometric model with instrumental variables to control endogeneity. We found that the demand is more elastic in poorer states and in regions whose relative price is closer to 70%, the technical rate of substitution between ethanol and gasoline, which is expected to trigger the demand decision of owners of flex-fuel vehicles. Those regions present higher demand price-elasticity, for ultimately logistic and tributary reasons, that determines relative prices. Results differ from those from Salvo and Huse (2013), since our model explain regional differences that do not need to rely on consumer preference heterogeneity, but occur because of logistics and income regional distribution. Our findings suggest implications for taxation and logistic infrastructure policies, which directly affect the relative prices of ethanol and gasoline, and, therefore, indirectly influence the demand elasticity.

Poder compensatório: coordenação horizontal na defesa da concorrência

Agreements among competitors to negotiate prices are challenged by antitrust authorities as per se illegal. Implicitly competition policy assigns negligible probability to such arrangements to yield net social benefits. This statement implies that countervailing power - related to the collective action of competitors in order to counteract the market power of a supplier or consumer - has a secondary role on competition policy. This paper argues that under particular conditions agreements among competitors in order to negotiate prices may increase social welfare. As a consequence, this type of arrangement should not be charged as per se illegal, inasmuch as they may create countervailing power and mitigate the effects of pre-existent market power. The analysis suggests that economic theory should be more intensely used in antitrust analysis, mainly when there are conflicting results with the established court decisions.