Electricity_in_Quebec_before_nationaliza - Electricity in...

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Electricity in Quebec before nationalization, 1920-1939 Vincent Geloso / PhD Candidate Economic History / London School of Economics Germain Belzile / Lecturer / Institute of Applied Economics at HEC Montréal Abstract: Upon opening history books about the electrical industry in the Canadian province of Quebec prior to nationalization (which was realized in two steps between 1944 and 1962), one is often confronted with the claim that the industry was monopolistic and was gouging consumers via predatory pricing especially when compared to the neighbouring province of Ontario. Even though it is hard to collect price data at the level of firms, it is possible to collect some overall - but often ignored data about the industry to evaluate this claim. With the use of such data over time, we can observe the opposite. Rather than behaving as oligopolies, the electrical firms in Quebec increased production faster than elsewhere while prices did the same in the period before nationalization. Moreover, there is strong evidence that productivity growth was higher in Quebec than in Ontario and the Canadian average. The main reason for this divergence between facts and history books is most likely the choice of benchmarking Quebec with Ontario a province which had opted for public production in the early 20 th century. 1 1 Acknowledgements go to Alexandra Foucher, Robert Rogers and Art Carden, Jean-Thomas Bernard, Herbert Emery
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Electricity Before Nationalization in Quebec before 1940 2 The Canadian province of Quebec is one of the foremost producers of hydroelectricity in the world. With its vast network of high current rivers, Quebec possesses a vast potential. In the early days of electricity, this potential was acknowledged and investments were made to harness it. The history of electricity in Quebec is tightly linked with the economic history of the province in the first half of the 20 th century. From the beginning, the private electrical industry of Quebec was accused of being monopolistic. Although the word “trust” in English does not necessarily monopoly in any economic sense, the French-Canadians in Quebec used this trust to imply that the industry was controlled by a monopoly. The claim was that, compared to the neighboring province of Ontario, prices were high. The most popular was to nationalize the industry and reduce prices to encourage industrial development. In the 1940s, this policy course was adopted and a major player was nationalized. In the early 1960s, the remaining firms were nationalized. Nowadays, there is a widespread belief that nationalization helped the Quebec economy. In this paper, we question this claim and propose that the pre-nationalization era was markedly different than what it is claimed to have been. First, the available data shows a downwards trend in prices while productivity surged upwards. Secondly, the comparison with Ontario on the basis of prices alone is misleading since that province decided that the public sector should be a provider of electricity at cost. By doing so, Ontario subsidized lower prices
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  • Fall '11
  • Arthur
  • Economics, Nationalization, Quebec

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