Corporate control and the public interest; theory and cases

Abstract

This thesis contains two lines of research. The first applies the strategic decision-making theory of the firm to the issue of corporate governance. We find that preferences vary over strategy but not all interests are currently being represented, resulting in a failure to govern in the public interest. As solutions, we consider membership of the company and also more immediate ways forward, focusing on regulation and democratically controlled public agencies, but stressing the fundamental significance of active, effective citizens. Throughout, our arguments are illustrated using utility companies as our primary examples. It includes discussion of electricity privatisation in Mexico and, to demonstrate that the theory is widely applicable, we also consider governance of corporate universities. The second line of research builds upon earlier analysis by considering aspects of British electricity privatisation. We consider the role of independent power producers, finding that they have not significantly increased competition as intended but have adversely affected the future viability of the system. The affect of privatisation on electricity prices is also considered via the use of a counterfactual model for continued state ownership. Observed prices are found to have been significantly higher than those that would have been charged had the industry remained in the public sector.