The privatisation and regulation of public utilities is a difficult topic that has not generated as much attention as it warrants. Understanding sectors like electricity or telecommunications and their regulation involves wading through dense, complex and off-putting details. Consequently, economists and public policy experts have produced most of the limited work on the topic. That is unfortunate. Privatisation and regulation are key elements of economic development in the region, but they are also important politically and are revealing about larger political processes. Political science accounts have largely focused on undemocratic practices such as implementing privatisation over the objection of unions or other concerned citizens, but privatisation and regulation also reveal a great deal about the functioning of political institutions, the character of political bargaining and the extent to which citizens are represented in the political system. The study of political institutions has grown substantially, but few efforts have actually linked them to public policy.

For that reason, Maria Victoria Murillo's new work is a welcome and important contribution to the study of institutions, public policy and democratic governance. Murillo thoroughly examines the content of public policies and links them to partisan preferences. This goes well beyond the less informative dichotomous question about the presence or absence of policy typical of ‘veto player’ approaches or the small literature examining the link between partisanship and neoliberal reforms. Murillo identifies two policy types: market-controlling policies include vigorous state oversight through strong, independently financed regulatory agencies, limits on foreign capital, rules for entry and investment, and regulatory discretion for solving conflicts among firms and, in particular, for protecting consumers from market abuses. By contrast, market-conforming policies view markets and competition as the best mechanism for settling disputes among firms and for protecting consumers. As a result, market-conforming policies establish weak regulatory agencies with limited personnel and budgets, minimal discretion for settling conflicts among firms or for establishing prices and few rules governing investment and market entry.

Murillo's argument is straightforward and elegant. External and economic pressures to reform may lead what she calls ‘pragmatic populist’ governments to accept (or even embrace) market reforms, but the partisan character and legacy of the privatising government still matters. Left-wing governments (‘pragmatic populists’) pass market-controlling policies, while right-wing governments promote market-conforming policies. Murillo adds an additional element to the model by considering the effects of political competition on policy reform as well as on the post-privatisation context and the changes to regulatory practices and powers over time. Voters typically distrust market reforms, and therefore privatisation does not occur when elections are highly competitive and the incumbent is facing a sharp challenge from the Left. In these cases, presidents prefer to avoid the electoral consequences of unpopular policies. When the political context is more propitious, both governments of the Left and the Right privatise, but with the sharply different policy content noted above. Partisan differences and competition also matter post-reform as policymakers respond to concerns about firm performance and regulation. In these cases, Murillo argues that political challenges to governing parties increase those parties' sensitivity to salient issues like tariffs. When political salience and/or competition is low, the political bargains among firms, politicians and consumers lead to a wider array of choice about reconfiguring regulatory effects among consumers, incumbent producers or potential competitors. As with the decision to privatise in the first instance, the mix of competition and partisan preferences is the key determinant of the specific content of the policy outcome.

Murillo tests her hypotheses through a mix of methods, including quantitative assessments of the logic of privatisation onset; a qualitative analysis of the privatisation and regulations decisions about electricity and telecommunications in Chile (market-conforming), Argentina and Mexico (market-controlling), supplemented by brief reviews of two additional cases to test for the effects of market size in El Salvador (market-controlling) and Panama (market-conforming); a brief assessment of the policy index score for 18 Latin American countries; and finally a detailed process-tracing of the post-privatisation politics of regulatory redistribution in the three main cases. This is an impressive, ambitious and thought-provoking book, and the carefully crafted, rigorous efforts to document and test the various elements of the argument are testament to its considerable merits.

In a book of this scope and ambition, one can always find room for disagreement or criticism. For example, Luigi Manzetti's work on privatisation, especially on electricity in Argentina and Chile, suggests quite different interpretations of the policy content. One could certainly ask about the actual working or implementation of policy. For example, it is not clear to me that Argentina's ‘market-controlling’ regulation of telecommunication was particularly controlling in practice. Similarly, I wonder how Argentina's populist government produced a policy that looked a great deal like that produced by the distinctly neoliberal group of technocrats surrounding Carlos Andrés Pérez in Venezuela or the very neoliberal Gonzalo Sánchez de Lozada of Bolivia and his team of policy advisors in the Millennium Foundation. Of the 18 cases, only four are classified as market-controlling, and these include a dictatorship (Chile) and a very limited democracy (Guatemala). How do these wrinkles affect the analysis? What do they suggest might be missing from the equation? The book offers little information about the character of the bargaining between potential buyers and privatising governments and the way the specific context shaped those bargains. Murillo also tends to emphasise presidential considerations and attitudes and offers much less discussion of executive–legislative negotiations.

These kinds of questions suggest that there is room for more research on this important topic. Murillo has done an enormous service by providing a first-rate account in its own right and pointing in the direction of fruitful future research. Anybody interested in privatisation and regulation, the relationship between political institutions and policy, partisan influences on decision making and good governance in the developing world more broadly should read this excellent book.