Institutions, Technology and Policy in Reregulated Infrastructures
Edited by Rolf W. Kunneke, John Groenewegen and Jean-François Auger
Chapter 8: Public Values versus Private Interests: An Empirical Comparison of Business Strategies in Liberalized Infrastructures
Casper van der Veen, Peer Ederer, Fabienne Fortanier, Alexandra Rotileanu and Bob de Wit INTRODUCTION The provision of infrastructure services to an economy is today dominated by private companies. It results from the privatization of many former state-owned companies, utilities and even state functions in the infrastructure sector. Public values, therefore, can no longer be achieved by direct action of the state as their guardian, but must be achieved through the market behavior of private companies. However, private companies are by definition not in the business of providing public value. Indeed, their task is to maximize their value to their private owner, a function which is deeply rooted in and protected by the property law system of any modern industrial economy. A conflict will therefore inevitably arise: whereas the public is dependent on, and interested in, the achievement of public values from infrastructure, the private companies that must provide such public values are not. That sets the fundamental basis for regulating market behavior of private infrastructure companies, such that their business conduct is forced within certain frameworks of action, which shall ensure the achievement of public values. Hence the notion arises that any achievement of public value comes more or less at the expense of the achievement of private value. As a result, there is intensive research and experimentation into which regulatory framework is best suited to make private companies forgo their native profit maximizing behavior and behave instead toward certain goals. The achievement of public and private values need...
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