One more ride on the merry-go-round! Public ownership and regulatory outcome in local public services

The paper investigates the effect of public ownership on regulatory outcome. The empirical setting is provided by the Italian natural gas liberalization reform, that made competitive bidding compulsory to award gas distribution franchises at municipality level. The paper shows that municipalities owning a capital share in a gas distribution network operator experiences a reduction of the hazard of awarding. The paper provides additional tests to support the causal interpretation of the findings. First, the credibility of competitive procedures is tested. Second, the presence of a contemporaneous dependence structure in the data is taken into account to deal with the effect played by imitation effects among municipalities served by the same operator.