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Advancing Public Goods

Edited by Jean-Philippe Touffut

The studies cover topics in the conceptualization, classification and stratification of public goods. Also examined are public institutional design, global economic institutions and partnership typologies. Individual papers address the financing, regulatory, organizational and legal aspects relating to services of general interest in Europe. The dynamics of global public good production, including monopolies, patents, scientific uncertainty and market failures, are discussed. Empirical research on the state, profit and non-profit sectors is presented. Providing numerous examples of specific public goods, the contributions also highlight the impact of macroeconomic policies on provision. The book presents a broad diversity of new approaches to global public goods within the framework of mixed economies, beyond the standard economic analysis of public services.
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Chapter 4: Funding Public Services in Europe: State Banks or Public–Private Partnerships (PPPs)?

Patrick Artus


Patrick Artus INTRODUCTION: THE PROVISION OF SERVICES OF GENERAL INTEREST IN EUROPE Services of general interest (SGIs) (whether economic or otherwise) are services for which there exist markets, but for which there are also specific obligations of public service. There may be an obligation of universal service, for example, access for the entire population, quality, security, affordable pricing, and so on. These specific obligations require a supervisory public authority (a regulator). Examples include energy, transport, telecommunications, the postal service, but also education, training, health, waste management, among others. Two types of SGI can be distinguished: those that can be provided by private operators that are subject to regulation, rules and monitoring, and those that are more difficult to provide through markets, in particular when a situation of natural monopoly obtains: the cost of production is less when it is evaluated by a single firm because of significant fixed costs/network activities or because there are significant network effects (positive externalities). The problem is then that the pricing structure chosen by the monopoly is higher than effective marginal cost pricing. Thus, either marginal cost pricing can be imposed, and the monopoly subsidized, thereby running the risk that it will have no incentive to rationalize; or, a secondlevel optimum with average cost pricing can be chosen; or, a system of cross-subsidies can be put in place between those services that are the object of a public service obligation and the other services. In most network...

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