Article ID: | iaor20001302 |
Country: | United States |
Volume: | 11 |
Issue: | 1 |
Start Page Number: | 117 |
End Page Number: | 154 |
Publication Date: | Jan 1999 |
Journal: | Journal of Public Budgeting, Accounting and Financial Management |
Authors: | Seiler Robert S. |
Keywords: | management, government, finance & banking |
There are striking similarities between publicly-held government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac and investor-owned public utilities. Each firm enjoys large scale economies that give a significant competitive advantage over other companies, possesses a dominant market position that it may be able to exploit to earn profits above competitive levels, and has a strong incentive to enter new markets when the life cycle of its core markets constrain its ability to increase profits. The recent behavior of Fannie Mae and Freddie Mac indicates that the government must impose more stringent economic regulation on those GSEs in order to be sure that they achieve their public purposes.